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China's initiative gives Obama's cap-and-trade deal a second life

Five years ago Sen. Joe Manchin fired a bullet — an actual bullet — through a copy of a cap-and-trade bill. But the idea is back from the dead.

Five years ago, West Virginia senatorial candidate Joe Manchin fired a bullet — an actual bullet — through a copy of a bill that would have set a limit on greenhouse gas emissions and let businesses trade pollution permits.

He won the election. And the bill died a political death. But on Friday, President Obama fired back, albeit without the drama of a real bullet.

In a joint news conference in the White House Rose Garden, he stood with Chinese president Xi Jinping, who announced that China will start the world’s largest carbon trading market by 2017. The move shatters some of the beloved talking points of the fossil fuel lobby, and applies shock-paddles to the once-dead idea of a U.S. cap-and-trade system. 

Could it be back on the table in America? 

It never really left. In fact, cap and trade has been flourishing at the state level, winning plaudits for creating jobs, slashing electricity bills, and forcing down carbon emissions. The only reported losers so far are power plant owners — a group many voters seem primed to let fail if it forces a transition to clean, renewable fuels.

And now the idea once again has a push from the White House, which praised China for succeeding where the U.S. has so far failed.

"China is making great efforts to advance ecological civilization and promote green, low-carbon, climate resilient and sustainable development," the White House said in a statement. "The two Presidents reaffirm their shared conviction that climate change is one of the greatest threats facing humanity and that their two countries have a critical role to play in addressing it." 

RELATED: GOP climate skeptics reluctantly address environment

That China and the United States are in this together has long been called into question by Republicans in Congress. Many of them believe that climate change is a fake problem invented by conniving liberal academics, and that any U.S. action would give China an upper-hand on the world stage. Friday's announcement is yet more evidence that the opposite is true.

China and U.S. face similar circumstances in many ways. They’re both looking to slash emissions while ramping up renewable energy production. Cap and trade is considered a powerful tool for doing so, because it hangs a price on carbon dioxide, pushing big polluters to pay the real cost of emissions or find cleaner ways of doing business. 

Both countries are working toward a big gathering in Paris this December. There, world governments hope to strike a deal, sucking the carbon out of the global economy without sacrificing growth. The United States is trying to slash greenhouse gas emissions 17% by 2020, and as much as 28% by 2025. China has promised to bend its own emissions curve by 2030, driving it downward toward zero. 

Other countries have made similar promises, and all are free to pursue their particular pledge any way they want. But with Friday’s announcement, cap and trade may be on the brink of becoming the global standard. Such is the power of a joint U.S.-China announcement on climate. 

The two nations are, after all, the largest annual and all-time polluters. Right now, China contributes nearly a third of annual carbon emissions worldwide. Other developing countries — especially India and the nations of Africa — could copy and paste whatever the big guys do to reform themselves. 

At the same time, President Obama never really stopped the fight for cap and trade. He just hasn’t mentioned the words. But in trying to make good on his 2008 inaugural promise to slow the rise of the oceans and heal the planet, he has managed to set up a scenario where cap and trade could succeed state by state. 

That’s thanks to his administration’s new Clean Power Plan, which puts a hard limit on emissions, leaving it up to the states to come up with a plan under the budget. Nine states comprising 25% of Americans already have mandatory cap-and-trade programs. And they’re working. 

RELATED: Obama faces opposition from all sides in Alaska

The Regional Greenhouse Gas Initiative (RGGI), the nation’s first such program, spans eight states from New York to Maine, including three with Republican governors.

(Fun facts: The idea of cap and trade itself began under the first Bush administration, as a plan to reduce acid rain. It’s biggest champion on the state level was once Republican Gov. Mitt Romney.)

Under the program, states agreed to limit the amount of carbon dioxide fossil fuel power plants emit each year, a threshold currently set at 88 million tons, which represents a 50%-plus reduction in emissions since 2008. 

RGGI, which everyone calls “Reggie,” has also been an economic boon. It generated $1.3 billion in benefits and 14,000 job-years between 2012 and 2014, according to a recent report by Analysis Group, a consulting firm. 

RGGI-state customers are also happy: Their electricity bills fell about 10%. 

California’s cap-and-trade program, meanwhile, is bigger and equally well-performing. Like China’s proposed plan, it spans most heavy polluters rather than just power plants. The auctions have made the state more than $2 billion since 2012, and those revenues have been shoveled toward renewable energy projects (as well as toward Gov. Jerry Brown’s dream of a bullet train). 

Not everyone is satisfied. New Jersey withdrew from RGGI in 2011, despite pocketing about $75 million for its general budget and $27 million for renewable energy. Gov. Chris Christie claimed the market didn’t work, despite strong evidence to the contrary. 

The other complainers, quite understandably, have been power plant owners. They’ve lost $450 million in recent years, according to the Analysis Group. 

At the same time, cap and trade may ultimately fail in China, and it may prove unable to scale in America. But one thing is certain: It's no longer dead.