Auctions to limit industrial emissions

Later this year, Massachusetts and other northeastern states will hold the nation's first auction of greenhouse gas emissions permits. Congress should take note: This market-based, technology-neutral auction is a model for how to encourage power generators to limit their emissions. And it could provide the foundation for a federal-state partnership to revolutionize energy use.

Auctions make sense. When Europe first tried regulating greenhouse gases under a cap-and-trade program, in 2005, it gave away, or "grandfathered", emissions permits to its power generators, which made modest changes in their operations and then sold the permits to others at a premium.

The result: windfall profits for the power companies. Europe is now switching to emissions auctions and plans to finance programs promoting climate protection, economic growth and energy security with the proceeds.