Bush CO2 plan won't spur a U.S. market: developers
Tuesday, January 23, 2007; 4:42 PM
NEW YORK (Reuters) - President George W. Bush needs to call for a wide-ranging cap on emissions of heat-trapping gases if he wants to spur market forces to combat global warming, carbon market developers said on Tuesday.
In his State of the Union address on Tuesday night, Bush will ask Congress to set a goal of reducing U.S. gasoline usage by 20 percent over 10 years and to reform fuel economy standards for cars, the White House said.
Eager to broker what could be a multibillion-dollar emissions market in the United States, market developers said Bush's call fails to require mandatory emissions rules from all sources, including power plants and heavy industry. The United States is the world's top producer of carbon dioxide, the main heat trapping gas that scientists link to global warming that could lead to deadly heat waves, storms, and flooding.
"Any plan that does not include mandatory carbon limits and cap and trade is really one more half-hearted effort by President Bush to quiet the crowd, but it's not going to work," Andrew Ertel, president of energy and emissions brokers Evolution Markets in New York, said in an interview.
In cap and trade emissions markets, companies that cut output of gases are rewarded with credits they can sell, and ones that do not are penalized by requirements to buy the credits or offset them through investments in clean energy projects. The emissions limits become tougher over time, allowing businesses time to adjust.
Several bills calling for cap and trade emissions markets are working their way through Congress. Green groups and 10 major U.S. companies, including Alcoa Inc., General Electric Co. and Duke Energy Corp., urged Bush and Congress this week to create such a market.
The United States developed the world's first pollution markets on gases that cause acid rain. But Bush pulled the United States from the Kyoto Protocol in his first term, saying it would harm the economy. Kyoto spurred a cap and trade market in the European Union on which about $20 billion in trades have occurred over the last few years and where companies invest in clean energy offsets to meet their requirements.
"We believe market mechanisms such as cap and trade not only provide the most cost-effective approach in achieving reductions, but can also drive ... technological innovation and economic growth," said Eron Bloomgarden, the U.S. director of EcoSecurities, a global developer and trader of carbon credits.
Bush favors voluntary means of cutting emissions, but developers said those do not provide enough incentive. "Why would you cut, if your competitors do not?" said Richard Rosenzweig, the chief operating officer for carbon asset management company Natsource LLC. Rosenzweig helped develop voluntary emissions programs in the Bill Clinton administration, but said experience shows they do not work.
Eileen Claussen, president of the Pew Center on Global Climate Change in Virginia, which has worked with businesses to reduce emissions, said the Bush plan provided some hope, but it probably would not go far enough to slow global warming.
"If the (Bush) objectives for cars and fuels are met, that would significantly improve the U.S. emissions profile," she said in an interview. "But I think the president is really missing an opportunity here, because the public, the states, and many, many members of Congress are interested in a comprehensive approach to this problem with mandatory requirements for all sources."