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U.S., Canada Carbon Markets Hinge on California, Barclays Says
2010-09-16 14:09:27.743 GMT
By Simon Lomax
Sept. 16 (Bloomberg) -- The future of cap-and-trade markets
for carbon dioxide pollution rights in the U.S. and parts of
Canada may depend on the outcome of a political battle in
California, analysts at Barclays Plc said.
Proposition 23, a ballot initiative that Californians will
vote on in November, would delay the state's Global Warming
Solutions Act until the state's unemployment rate, now 12.3
percent, falls to 5.5 percent for four consecutive quarters. The
law authorizes a series of pollution-cutting programs, including
a California cap-and-trade market that's due to start in 2012.
California plans to join some other U.S. states and
Canadian provinces in forming a regional cap-and-trade program
called the Western Climate Initiative. The fate of the regional
market "will fully depend on the outcome of the California
referendum on Proposition 23," Trevor Sikorski, a London-based
analyst at Barclays Capital, said today in a note to clients.
If Proposition 23 succeeds, a "fairly lengthy suspension"
of California's global warming law is likely, which may make
other governments in the initiative reluctant to pursue cap-and-
trade programs on their own, Sikorski said.
Last year, the U.S. House of Representatives narrowly
passed legislation to replace regional carbon markets with a
national cap-and-trade program in which power plants, factories
and refineries buy and sell a declining number of carbon dioxide
pollution rights issued by the federal government.
It stalled in the Senate and won't be taken up this year,
Senate Majority Leader Harry Reid, a Nevada Democrat, said Sept.
7. Democrats now hold wide majorities in the House and Senate,
and the potential for Republicans to gain seats in November's
congressional elections means "the prospects for federal cap-
and-trade legislation appear distant," Sikorski said.
If global warming laws in California, the most populous
U.S. state, are suspended, then "future progress on federal
climate legislation" would be thrown into further doubt, he
said. The "showdown" over Proposition 23 "looks like it will
be a seminal moment in U.S. climate legislation."
For Related News and Information:
Top environment stories: GREEN <GO>
Stories about U.S. and climate: TNI US CLIMATE <GO>
Global emissions data: EMIS <GO>
Northeast U.S. trading: RGGI <GO>
--With assistance from Mathew Carr in London. Editors: Richard
Stubbe, Joe Link.
To contact the reporter on this story:
Simon Lomax in Washington at +1-202-654-4305 or
slomax@bloomberg.net.
To contact the editor responsible for this story:
Dan Stets at +1-212-617-4403 or dstets@bloomberg.net.
