A Late Entry Into the Climate Change Sweepstakes: The Midwestern Greenhouse Gas Accord Cap-and-Tax Approach

Apparently in an effort to demonstrate to Congress that coal states also support greenhouse gas regulation, the Midwestern Greenhouse Gas Reduction Accord last week released draft design recommendations for a GHG program. Several facets of this announcement are interesting:

  1. The Waxman-Markey bill would basically preclude the MGGRA from implementing its program.
  2. If the point of the effort is to demonstrate to Congress that coal states indeed do support GHG regulation, they might be more successful if they had managed to bring Indiana and Ohio into the fold.
  3. The program as tentatively proposed would include a cap-and-tax approach, in which, like other cap-and-trade models, GHG emitters would need allowances for each ton of CO2e that they emit. However, they would also have to pay a fee, suggested to be in the range of $2-$4/ton of CO2e, for each allowance.

It’s difficult to imagine the MGGRA approach going anywhere at this point, but I don’t want to be too dismissive. Like potential EPA regulation under existing CAA authority, the threat of yet another regional program has to add to the weight of issues pushing fence-sitting members of Congress towards a willingness to support a federal program.

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