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| Carbon Trading to be Regulated Under New Climate Bill |
USAgNet
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Senators Joe Lieberman and John Kerry unveiled their long-delayed climate change bill Wednesday and immediately encountered liberal and conservative critics who said the measure was either an energy bailout or a danger to the American economy. The core of the proposal aimed at global warming would require 7,500 domestic factories and power plants to meet reduced emission targets. The sponsors said their aim was to reduce 2005 levels of carbon pollution by 17 percent in 2020 and by more than 80 percent in 2050.
The legislation would establish a collar to keep carbon prices between $12 and $25 per tonne. Participation in the auction and primary cash markets would be restricted to compliance entities and a limited number of market makers, according to the legislation. The secondary market would be open to all participants but would operate on a cash-cleared basis and would be highly regulated and exchange-traded.
As expected, the Commodity Futures Trading Commission (CFTC) would have jurisdiction over trading of greenhouse gas instruments under the Commodity Exchange Act. The legislation would also require the CFTC to impose position limits to prevent excessive speculation.
However, the overriding belief among industry players is that the legislation will be difficult, if not impossible, to pass this year. Republican Senator Lindsey Graham withdrew his support for the bill two weeks ago following a row over legislative priorities, leaving Democrat Kerry and Lieberman, an independent, lacking significant Republican backing. |
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