Massachusetts' Republican Governor Mitt Romney proposed rules on Wednesday in his state alone that would cap the price that companies would pay for carbon dioxide credits.

In carbon markets, such as the European Union's, companies that cut emissions under mandatory limits can sell credits to those that choose not to.

"They help us accomplish our environmental goals while protecting jobs and the economy," Romney said in a statement on his Web site on Wednesday.

But George Pataki, the Republican governor of New York state who hatched the overall plan in 2003, disagreed.

"It appears that Massachusetts has decided to pursue a single state command and control plan that will impose new taxes, but fail to actually reduce emissions," a spokesman for New York Governor George Pataki said.

In Romney's plan, when the price for carbon emissions reaches $6.50 per tonne for a year, power companies in his state would be able to seek offsets from anywhere else in the world.

Pataki's spokesman said the nine states in the plan, called the Regional Greenhouse Gas Initiative (RGGI), have had talks about caps, but that Pataki does not support the kind of limits Romney proposes. He did not elaborate.

Business groups, including the American Council for Capital Formation, say RGGI states would suffer from increased energy costs and relocation of plants to other states without limits.

The US government dropped out of the Kyoto Protocol climate change pact in 2001, saying it would hurt the economy and that voluntary emissions reductions work better than mandatory cuts.

Carbon brokers anxious to get a market going and many environmentalists hope that RGGI and similar plans being formed in western states such as California will bring pressure on the federal government to mandate cuts in greenhouse gases.

Romney had already delayed what could have been a splashy kick-off for the plan.

RGGI states had planned a public announcement during the UN's climate talks in Montreal that run through Dec. 9.