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Leadership from Washington on Climate Change

The United States took a further step forward yesterday in its action against climate change as another state outlined plans to use carbon pricing to reduce its greenhouse gas emissions.

The United States took a further step forward yesterday in its action against climate change as another state outlined plans to use carbon pricing to reduce its greenhouse gas emissions.

Jay Inslee, the Democratic Governor of the state of Washington, published legislation to create a cap and trade system, and urged lawmakers to pass it into law.

Governor Inslee decided to go ahead with his proposal despite the Republican Party holding a narrow majority in the Washington state Senate.

He has attempted to win over allies and opponents by suggesting that a cap and trade system could raise money to spend on schools and infrastructure.

Governor Inslee has sought advice about the plans from a number of other countries, including the UK, and yesterday's announcement was accompanied by a letter of support from Climate Change Minister, Amber Rudd.

Washington's proposed scheme is expected to eventually link to California's system, which was introduced nearly two years ago.

At the start of this year, Quebec and California joined together their cap and trade schemes, and held their first joint auction of emissions permits in November.

California's efforts to reduce its greenhouse gas emissions began under Republican Governor Arnold Schwarzenegger, and have been strengthened by his successor, Jerry Brown.

Despite claims by critics that the scheme would hinder California's economy, Governor Brown has managed to generate surplus annual budgets for the state after a decade of deficits, thanks to a strong recovery from the downturn.

Governor Brown has earmarked part of the income from the cap and trade scheme to invest in the building of a new high-speed rail link between Los Angeles and San Francisco.

This latest move by Washington means that all three of the west coast states, whose combined economy would be the fifth largest in the world if they were a single country, could soon have carbon pricing measures in place.

Last week, Oregon's legislature published an independent evaluation of a possible carbon tax, which is favoured by its Governor, John Kitzhaber.

The three western states, together with the Canadian province of British Columbia, last year published a Pacific Coast Action Plan on Climate and Energy, pledging to "account for the costs of carbon pollution in each jurisdiction" through carbon pricing.

Nine states in north-east United States have participated in a cap and trade scheme, known as the Regional Greenhouse Gas Initiative, since 2008.

A review earlier this year by the World Bank found that about 40 countries and more than 20 regions are putting a price on carbon, covering about 12 per cent of the annual global emissions of greenhouse gases.

Carbon pricing is recommended by economists as the best way of addressing the market failure resulting from the fact that the cost of goods and services that involve emissions of greenhouse gases do not take into account the damage caused by climate change.

A carbon price increases the cost of energy generated by fossil fuels, and encourages the use of alternatives, such as renewables.

The revenue generated by carbon pricing schemes can also be used to support the development of low-carbon energy.

A cap and trade scheme imposes a limit on emissions over a particular period, and emitters can buy and sell permits in order to meet their quotas, creating a price on carbon.

Alternatively, a carbon price can be set by imposing a tax on emissions.

Washington's initiative provides a further boost for the international reputation of the United States, despite a stalemate in Congress preventing any new federal legislation to tackle climate change.

President Obama in November made a joint announcement in Beijing with the Chinese President, Xi Jinping, in which he committed the United States to reduce its emissions by between 26 and 28 per cent by 2025 compared with 2005.

In an impassioned speech last week at the United Nations climate change summit in Lima, Peru, Secretary of State, John Kerry, pointed out that a 28 per cent cut in emissions by 2025 would put the United States on a path to a reduction of 83 per cent by 2050 compared with 2005.

By comparison, the 2008 Climate Change Act commits the UK to a cut in annual emissions of 76 per cent by 2050 compared with 2005.

The Obama Administration expects to be able to achieve its 2025 goal by implementing existing measures, including controls on emissions from new and existing power plants, which is expected to mean a phase out of coal as a source of electricity.

The policy was outlined in President Obama's Climate Action Plan, published last year, and would not require approval from Congress.

With many states, including Washington, beginning to introduce climate legislation, the United States may be on track to deliver the cuts promised by President Obama, despite the intransigence of a Congress that will be entirely controlled by the Republican Party from January 2015.

Bob Ward is policy and communications director at the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at London School of Economics and Political Science.

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