Midwestern Greenhouse Gas Reduction Accord Update

The Midwestern Greenhouse Gas Reduction Accord (Accord) held meetings this week in Indianapolis to  continue its quest toward adopting a Midwest cap-and-trade policy, along with other climate change regulations. 

In November 2007, nine Midwestern governors and two Canadian premiers signed on to either participate or observe in the Accord. The states that have officially signed on as members include: Wisconsin, Iowa, Illinois, Michigan, Minnesota, and Kansas. The Midwestern states that are observers include: Indiana, Ohio, and South Dakota.  Nebraska, North Dakota, and Missouri have not signed on to the Accord as either a member or an observer.

The Accord is largely being staffed by environmental groups, such as the Center for Climate Strategies, the Great Plains Institute, and the Pew Center on Global Climate Change.

Since its first meeting over a year ago, the Accord has drafted a set of preliminary recommendations that include a cap-and-trade program that would apply to the Midwest. In addition, the Accord is drafting a set of “complementary” climate change policies, such as a Low Carbon Fuel Standard. The Accord plans to finish the final model rule by the end of the summer or autumn of 2009 and submit the rule to the various state legislatures and governors for their consideration.

Up to this point the Accord has moved quickly in adopting a set of draft policies. However, the meeting in Indianapolis exposed some differences among the various stakeholders on the Advisory Group, the entity that will submit the final model rule with the respective Midwest governors. 

The sticking point is around the modeling, which analyzes how much environmental policies will actually cost. Proponents of a cap-and-trade program want an analysis of all of the climate change regulations, but not a separate analysis of the cap-and-trade program. Other groups, however, want to model the cap-and-trade policy separately to gain a clear understanding of how much that policy alone will cost.  Proponents on the other hand claim that certain groups will use the high costs of the cap-and-trade program as an argument against adopting the policy, and therefore are pushing to exclude a separate analysis. 

The next set of meetings is tentatively planned for March, with plans to finalize the model rule by the end of the year.

The other issue affecting the Accord is whether the new Obama administration and Democratically controlled Congress will adopt a national cap-and-trade policy. The conventional wisdom is that some sort of climate change regulations will be adopted by Congress over the next couple of years, making a Midwest cap-and-trade policy unnecessary.

The Hamilton Blog will provide continuous updates of the Accord.