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Senate Proposes New Carbon Market

By Daniel Stouffer

Republish: EasyPublish™ Published: 24Jun2010 Word count: 570 Viewed: 257 time(s) Get Free Content For Your Site

Intensive negotiations go on behind the scenes in the U.S. Senate, as focus turns toward climate change legislation during the course of 2010. The House of Representatives may have narrowly passed the American Clean Energy and Security Act in 2009, but the intensive cap and trade program contained therein did not meet with much favor on the other side of Capitol Hill.

Under new initiatives posed by a Republican Senator (Graham), a Democrat (Kerry) and Washington's only independent (Lieberman), power companies would be forced to buy and sell their "rights" to pollute within a new carbon market, with oil companies expected to pay fixed fees for their emissions. This is essentially a hybrid utility carbon market, which is another angle for consideration by legislators.

Intensive negotiations go on behind the scenes in the U.S. Senate, as focus turns toward climate change legislation during the course of 2010. The House of Representatives may have narrowly passed the American Clean Energy and Security Act in 2009, but the intensive cap and trade program contained therein did not meet with much favor on the other side of Capitol Hill.

Historically, the issue of climate change has been very contentious across the political divide and few observers expect the Senate to be able to advance climate change legislation without a serious fight during 2010. Many expect the looming political elections in November to temper activity and that little will be effectively done until the 2011 congressional sessions.

Many argue that widespread support for controversial "cap and trade" legislation has waned somewhat, especially as political attention was focused on healthcare issues during almost all of 2009. Many were disappointed by the lack of results emanating from the Copenhagen Summit and environmentalists continue to warn us that we can ill afford to stall and must pay clear attention to the introduction of carbon market forces.

One of the major issues facing legislators and championed by detractors of the current initiative is the provision that allows shorelines and oceans offshore to be opened up to oil and gas drilling. With such provisions contained within proposals going forward, those Senators whose states are directly affected by prospective drilling are likely to fight against the proposals.

If senators can get beyond issues such as offshore oil and concentrate on the broader legislation at hand, new proposals for the establishment of a carbon market affecting oil companies and power companies could gain favor. Within the new legislation, a fixed fee would be paid for emissions by oil companies, linked to the price that power companies pay for carbon dioxide allowances. These calculations would be related to what is workable within the carbon market.

As companies large and small come to the realization that some form of carbon market may well be in evidence within the years ahead, they should realize that they will, in one form or another, be more liable for the energy that they use within their daily operations. It is in their best interests to reduce their use of energy and consequent carbon emissions, so that they can contain their costs and be seen to be acting in a more sustainable fashion.

Activity from the cross party group of senators is now ramping up as they seek to help introduce a workable trading scheme for the carbon market ahead. As this exploration continues, industry groups including Chambers of Commerce and bodies representing electricity and utility production companies are becoming more actively involved.

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