Isramart study: Carbon caps will benefit midwest: study

Isramart Study Report The coal-dependent US midwest could thrive under carbon caps, a study released Monday finds.

But the region, which is a major energy consumer and GHG emitter, could also be harmed if the policies aren’t implemented properly.

“The midwest can and must turn the challenge of changing energy and climate policy to its economic advantage,” said the report, which was issued Monday by the Chicago Council on Global Affairs.

Despite its reliance on carbon-intensive fuels, the midwest has many positive attributes, including its large manufacturing base.

The manufacturing base provides substantial opportunities to improve energy efficiency while also building the next generation of clean energy products, the report said.

Still, policymakers should be aware of the vulnerability of the region to trade impacts if the policy measures aren’t taken to protect its manufacturers.

Currently, six US states and one Canadian province participate in the Midwest Greenhouse Gas Reduction Accord (MGGRA), which is designing a cap-and-trade system in the event that a federal programme fails to materialise.

The group recommends an emissions cap between 18 and 20 per cent below 2005 levels by 2020, with a 2 per cent strategic reserve of emission allowances that could be used to minimise potential price increases.

The recommended 2050 target is 80 per cent below 2005 levels, the advisory group said.

Those targets are similar to the ones outlined in the Waxman-Markey bill, the leading cap-and-trade bill currently making its way through Congress.

Offsets

The study took a positive view of the role carbon offsets could play for the midwest as both as a cost-containment mechanism and as a potential source of revenue for the region.

Offset opportunities in the midwest include reductions in methane emissions from waste management and feedlot operations, and reductions in nitrous oxide emissions from fertiliser applications as well as soil carbon sequestration, the study said.

The MGGRA design would actually permit fewer offsets for compliance – 20 per cent as opposed to about 30 per cent under Waxman-Markey.

The House Agriculture Committee will hold a hearing on the Waxman-Markey bill on Thursday afternoon, and it is expected to address the concerns of midwestern states.