The US administration and congressional leaders are currently discussing plans to implement a cap and trade or a Kyoto style emission reduction program.  While it is difficult to predict how these plans will evolve, it is likely that any such system will be partially based on existing regional mandatory markets adopted by the states.

There are currently two main mandatory US carbon compliance schemes.  These are the Regional Greenhouse Gas Initiative (RGGI) and the Western Climate Initiative (WCI).  These schemes cover 17 US states and 4 Canadian provinces.

Regional Greenhouse Gas Initiative (RGGI)

The Regional Greenhouse Gas Initiative is a regional effort by northeast states to reduce carbon emissions.  Member states include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.

RGGI is implementing a cap and trade system for CO2 emissions from power plants in the member states. Covered emissions are those from fossil fuel power plants with 25 MW or greater generating capacity.  Emission permits are auctioned quarterly beginning in September 2008, and the first three-year compliance period began on January 1, 2009.  Proceeds from the auctions are used to promote energy conservation and renewable energy in the participating states. 

• January 2009 start
• Covers CO2 from 25MW+ electricity generators
• Caps at roughly 2005 emissions through 2014; 2.5% yearly decrease through 2018
• 3-year compliance periods
• Offset use for 3.3% of compliance obligation
• $7 and $10 price triggers increase allowable use of offsets after  settling periods
• Effectively a 100% auction of allowances

Carbon Offsets under RGGI

RGGI provides for compliance flexibility in meeting emissions targets through the use of emissions offsets.  These offset allowances can come from project outside the capped sector (electric power generation) and may be sourced from projects located outside the RGGI member states with certain conditions.

RGGI has developed prescriptive standards to ensure that offsets are real, additional, verifiable, enforceable, and permanent.  There are currently five eligible project types for offsets:

• Landfill methane capture and destruction
• Reduction in emissions of sulfur hexafluoride (SF6) in the electric power sector
• Sequestration of carbon due to afforestation
• Reduction or avoidance of CO2 emissions from natural gas, oil, or propane end use combustion due to end use energy efficiency in the building sector.
• Avoided methane emissions from agricultural manure management operations.

Western Climate Initiative (WCI)

The Western Climate Initiative is a regional effort by 11 US states and several Canadian provinces to reduce carbon emissions.  There are also an additional seven states and Canadian provinces as well as six Mexican states as observers.  When implemented the WCI regime will cover more than 20% of the US economy and more than 70% of the Canadian economy.

Members:

• Arizona, British Columbia, California, Manitoba, Montana, New Mexico,
• Ontario, Oregon, Quebec, Utah, Washington

Observers:

• Alaska, Baja California, Chihuahua, Coahuila, Colorado, Idaho,
• Kansas, Nevada, Nuevo Leon, Saskatchewan, Sonora, Tamaulipas,
• Wyoming