The Midwest Greenhouse Gas Reduction
Accord (MGGRA) was a commitment by governors of six Midwestern
states, including Wisconsin, and the premier of one Canadian
province. The objective of the Accord was to reduce greenhouse gas
emissions through a regional cap-and-trade program and other
complementary policy measures. The accord aimed to reduce emissions
by up to 20 percent by stripping carbon from industries. Signed in
November 2007, participating states are no longer pursuing MGGRA.
One of the goals of the MGGRA was to
develop a market-based and multi-sector cap-and-trade mechanism to
reach targeted greenhouse gas emissions. This mechanism sets limits
on the total amount of GHGs that can be emitted by certain sources
and permits those entities under the cap to trade pollution credits
with each other. The capped sectors included electricity generation
and imports, industrial combustion and process sources,
transportation fuels, and residential, commercial, and industrial
fuels not otherwise covered. Only sources producing more than 25,000
metric tons of carbon dioxide are covered under the accord. Under
the MGGRA, the credits were to be compatible with other regional,
and possibly federal, programs so that greenhouse gas sources can
trade allowances outside the Midwest. Trading creates incentives for
producers to develop low cost solutions to reduce emissions.
Creating market incentives is an
excellent way to get into action. These incentives encourage
industries to decrease their greenhouse gas emissions, helping to
fight climate change.
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