-

President Obama's 2009 State of the Union address called for Congress to send him "legislation that places a market-based cap on carbon pollution". He plans to make some serious bucks from this - his budget includes 646 billion dollars of revenue from selling carbon permits between 2012 and 2019. But if this policy goes ahead it will have to consider already existing state-level carbon trading schemes.

Following America's decision not to ratify the Kyoto protocol, state and local governments began setting policies of their own - including three regional emissions trading schemes (these are essentially smaller versions of the EU Emission Trading Scheme, which Carbon Retirement is plugged into).

In the East, the Regional Greenhouse Gas Initiative, known by the friendly nickname 'Reggie', kicked off last year, capping emissions from power plants to 10 percent below 2009 levels by 2018. Not too ambitious, but this is a working market and it's a start.

In the West, the Western Climate Initiative aims to cover almost all emissions and reduce them to 15 percent below 2005 levels by 2020. The scheme is yet to be approved, but already includes states on the Pacific coast, the Rocky mountains, central Canada, and even some Mexican 'observer' states.

And in the (North) Midwest, the Midwestern Greenhouse Gas Reduction Accord is in its formative stages, with seven member states and four observer states signed up.

There are benefits to this regional basis for carbon trading schemes. Their independence leaves them free from the whims of federal government. Regional control makes it easier to determine how many permits local industries should have. They are able to move across borders to Canada and Mexico in a way that a national scheme couldn't, reducing the risk of 'leakage' (where polluting companies relocate to neighbouring countries that have more relaxed environmental regulations).

However, there are also benefits to Obama's federal plan. The current regional efforts allow free-rider states - in this case the Southern states - to gain from their neighbours' regulations without paying the real costs. Common standards across the board, including the emission reduction levels, the industries affected, and a common price would be simpler for industry to work. But most of all, it would send a message to the world that the US is acting, which goes a long way to oil the wheels of international climate change negotiations. On a regional level, the US has been acting for some time. Hopefully under Obama the world will listen.