Senate Proposes New Carbon Market

Negotiations are escalating behind the scenes of the United States Senate as focus is now shifting towards climate change within 2010. In 2009, the House of Representatives might have already passed the American Clean Energy and Security Act, but the cap and trade program within this bill did not get favorable response from the opposing side.

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 would be a hybrid utility carbon market, which could be another point of consideration for law-makers.

Intensive negotiations go on behind the scenes in the U.S. Senate, as focus turns toward climate change legislation during the course of 2010. In 2009, the House of Representatives might have already passed the American Clean Energy and Security Act, but the cap and trade program that's within this did not gain favorable response from its opponents.

Climate change has been historically political and it is expected by a few observers that the Senate shall be able to move forward when it comes to issues on climate change without a serious thrust within 2010. A lot of people are actually expecting that the elections on November will affect such activity and it is most likely that much will not take off until the congressional sessions will be realized in 2011.

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.

Among the many issues faced by law-makers would be the provision allowing oceans offshore to be opened up for gas and oil 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.

Both small and big companies have already realized that some form of carbon market could be evident in the years to come, and they should also realize that they will, in one way or another, become accountable to the energy that they consume during 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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