Speaking one day after Republicans won control of the House of Representatives, President Barack Obama has backed away from a cap-and-trade program saying he will work with Republicans on other ways to cut carbon emissions, reports Bloomberg Businessweek.
A cap-and-trade program was included in the climate bill passed by the House last year, but stalled in this year's Senate.
Peter Shattuck, a carbon-markets policy analyst at Environment Northeast, told Bloomberg News that prospects for a U.S. carbon market are "more remote than before the election because the vast majority of Republicans have opposed cap-and-trade proposals to date."
In addition, it's likely that the Republicans will increase pressure on Obama to delay or cut his plan to regulate carbon through the Environmental Protection Agency (EPA), Kevin Book, managing director of ClearView Energy Partners, told Bloomberg.
Dozens of business groups and associations, who oppose EPA regulation, have been lobbying and/or have filed challenges to stop the EPA's carbon rules.
The president remains committed to “common-sense” EPA regulation of greenhouse gases, Heather Zichal, deputy assistant to the president for energy and climate change, said in an e-mailed response to Bloomberg.
And Obama stands behind his pledge to cut U.S. emissions about 17 percent by 2020, said Todd Stern, Obama’s top climate negotiator, in the article.
As a result of Obama's comments, futures contracts in the U.S. Northeast's carbon market fell to their lowest level in six weeks, reports Bloomberg Businessweek. Regional Greenhouse Gas Initiative (RGGI) permits for December delivery fell 2 cents, or 1.1 percent, to $1.88 each on the Chicago Climate Futures Exchange. RGGI carbon prices have fallen 18 percent this year.
The RGGI auction of carbon dioxide allowances, held on Sept. 8, hit its lowest allowed level for allowance prices for the two-year old program, selling at $1.86 a ton.
However, Bloomberg reports that prices traded at $1.85 on Nov. 3, a record intraday low that was below the minimum allowable bid of $1.86 in carbon dioxide allowances.
Meanhwhile, the Chicago Climate Exchange (CCX) is set to close by year's end. Although CCX commitments were set to expire at the end of the year, those participating in the program thought it would have continued if there were any chance of climate change action, reports National Geographic.
Instead, the eight-year-old platform that enabled power companies, manufacturers, and others to reduce their greenhouse gas emissions and trade the credits they earned, will shut down at the end of this year, according to the article.
Many in industry and the environmental community saw the CCX as a less costly approach for reducing greenhouse gases than regulations from Washington, D.C., with voluntary participation, reports National Geographic.
It's estimated that the 450 members of the exchange, including power companies, manufacturers, cities, and universities, cut emissions by nearly 700 million metric tons of carbon dioxide since 2003. Reductions in industrial emission accounted for 88 percent of those cuts, while the remaining 12 percent came from offset projects, according to the article.
CCX will continue to operate a registry for carbon offset programs, and there will continue to be carbon trading on the Chicago Climate Futures Exchange (CCFE), a platform for both voluntary and small, regional mandatory climate programs like RGGI, reports National Geographic.
