Western states united to bypass Bush on climate

NEW YORK (Reuters) - Five Western U.S. states have formed the latest regional pact to bypass the Bush administration to cut emissions linked to global warming through market mechanisms.

The Western Regional Climate Action Initiative requires Oregon, California, Washington, New Mexico and Arizona to develop a regional target in six months for reducing greenhouse emissions according to statements from the states' governors.

During the next 18 months, the states will devise a market-based plan, such as a load-based cap-and-trade program, to reach the target. They also have agreed to participate in a multi-state registry to track and manage greenhouse gas emissions in their region.

More politicians and corporations have been pressuring the federal government to join most of the world's other developed countries in regulating the gases most scientists blame for global warming.

Several eastern U.S. states have signed a similar agreement called the Regional Greenhouse Gas Initiative. Utility TXU Corp. on Monday scrapped plans to build eight of 11 new coal-fired power units in Texas as part of a buyout by private equity firms.

Bicoastal regional greenhouse pacts could force U.S. smokestack and transportation businesses to lobby more intensely for a national greenhouse plan, rather than face patchwork local regulations, said Jeremiah Baumann, an advocate with the Oregon State Public Interest Research Group.

"With the Western states you've got a huge part of the U.S. economy ... beginning to regulate greenhouse gases, that should send a message to business that national regulations are coming" Baumann, said.

California Gov. Arnold Schwarzenegger recently passed the country's toughest greenhouse emissions laws which aim to reduce state output of the gases by 25 percent by 2020.

The regional agreement "shows the power of the states to lead our nation" and "sets the stage for a regional cap-and-trade program, which will provide a powerful framework for developing a national cap and trade program," Schwarzenegger said in a statement.

The other states in the Western pact also have passed greenhouse gas reduction initiatives. The regional deal would allow the states to use market mechanisms more efficiently to reduce output of the gases, said Baumann.

The United States initiated cap-and-trade programs on pollutants such as acid rain components in the early 1990s.

In such markets for greenhouse gases, companies can offset their emissions by investing in clean projects like solar and wind power, or earn credits they can sell for cutting emissions at their factories.

In 2005, the European Union formed a cap-and-trade program to meet its countries' obligations under the Kyoto Protocol.

Unlike developed countries that ratified Kyoto, the United States does not regulate carbon dioxide or other greenhouse gases. President George W. Bush withdrew the country from Kyoto early in his first term.

Like California's laws, the Western pact seeks to regulate imports of electricity from dirty coal-burning power plants from surrounding states outside of the agreement.

The seven states in the eastern regional pact, which include New York and Massachusetts, aim to cut carbon dioxide emissions at power plants by 10 percent by 2019.