Program Goal

Develop a multi-state cap-and-trade program covering greenhouse gas (GHG) emissions. The program will initially be aimed at developing a program to reduce carbon dioxide emissions from power plants in participating states, while maintaining energy affordability and reliability and accommodating, to the extent feasible, the diversity in policies and programs in individual states. After the cap-and-trade program for power plants is implemented, the states may consider expanding the program to other kinds of sources.

Guiding Principles for Program Design

1. The program will emphasize uniformity to facilitate interstate trading in GHG allowances and will build on successful cap-and-trade programs and mechanisms already in place.
   
   
2. The program will be expandable and flexible, permitting other states to seamlessly join in the initiative when they deem it appropriate.
   
   
3. The program will not unduly interfere with other national, state or regional emissions trading programs and initiatives, but may serve as a platform and model for the implementation of future additional emissions trading programs and initiatives that individual or multiple states might deem appropriate.
   
   
4. The program shall start simply and develop over time. The initial phase of the cap-and-trade program will entail the allocation and trading of carbon dioxide allowances to and by sources in the power sector only. In a subsequent phase of the program, states and stakeholders will work together to develop reliable protocols for offsets (i.e., creditable reductions outside the power sector) that may be used to achieve compliance with the cap. States may be able to achieve greater emissions reductions as the number of sources covered and the variety of compliance options increases, thereby reducing compliance costs.