Global warming pollution from power plants that serve California could be curbed by a carefully crafted cap and trade emissions program, according to a report released by the California Energy Commission October 17. To fully address California's climate impact, controls are needed on both in- and out-of-state greenhouse gases emitted from supplies used to meet the state?s power needs, said the study, Design of a Cap on Emissions from California Power Demand. The report by the Center for Clean Air Policy also recommends capping pollution on the basis of power demand instead of generation. This would allow the state to regulate out-of-state coal power supplies and encourage renewable energy and efficiency, the center said. While California imports one-fifth of its power, half the CO2 emissions associated with in-state demand come from coal plants located outside the state. Generation of in-state power results in 633 pounds of CO2 emissions per megawatt-hour, compared to an average of 1,188 pounds\/MWh in the Western region, according to the report. However, the report cautions that any cap and trade program that covers both in-state and imported power supplies should be carefully designed to avoid challenges under the Interstate Commerce Clause of the U.S. Constitution, which prohibits disparity in treatment. A possible problem is California?s definition of qualifying renewable supplies under its renewables portfolio standard, which some assert creates a bias. "A renewable resource in California could be used to meet both the state RPS and cap on power plant emissions," said the report. At the same time, ineligible out-of-state renewable resources, such as large hydro, "could only be used to meet either" a non-California RPS or a California cap on emissions, the report noted. A program also would have to be tied to restrictions on final power sales to avoid stepping onto federal turf, specifically federal authority over wholesale power and transmission transactions. California could cut emissions from in-state natural gas?fueled generation by increasing the capacity of the newer, more efficient facilities and ramping down the aging plants in the fleet. Dirtier out-of-state power costs less than half of what California?s less polluting electricity costs. Thus, the report recommended creating an emission portfolio standard for all load-serving entities that meets a set environmental standard based, for instance, on a pound-per-megawatt-hour output rate. This would create economic signals to encourage less polluting power supplies. Such a program "could potentially limit the amount of coal-fired generation that can be sold to states with standards, requiring coal-fired generators to seek out other markets, or lower production," the paper explained. The emission standard, which involves considerable complexity, would have to be effectively tracked and verified. Moreover, it would have to be "transparent, consistent and widely accepted, and must address the diversity of contractual situations," according to the report. It is available at the climatechange.gov Website.