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Obama Moves Away From 'Cap and Trade,' Northeast Market Falls
2010-11-04 04:00:02.1 GMT
By Kim Chipman and Simon Lomax
Nov. 4 (Bloomberg) -- President Barack Obama distanced
himself from the "cap-and-trade" program he once backed as the
best tool to limit global warming, saying he wants to work with
Republicans to find other ways to curb carbon emissions.
"Cap-and-trade was just one way of skinning the cat,"
Obama said at a White House news conference yesterday, referring
to a system in which companies buy and sell a declining number
of pollution allowances. "It was a means, not an end," he
said. "I'm going to be looking for other means to address this
problem."
Futures contracts in the U.S. Northeast's carbon market
fell to their lowest level in six weeks yesterday after Obama's
remarks.
Obama spoke the day after Republicans won control of the
House of Representatives and gained at least six seats in the
Senate after a campaign in which Republican candidates and some
Democrats denounced cap-and-trade as a disguised energy tax. A
cap-and-trade bill backed by Obama passed the House last year,
then stalled in the Senate this year.
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," Peter Shattuck,
a carbon-markets policy analyst at Environment Northeast, an
advocacy group based in Rockport, Maine, said in a telephone
interview.
Carbon dioxide from power plants, cars and other man-made
sources is a primary greenhouse gas blamed by scientists for
global warming.
Prices Fall
Permits from the Regional Greenhouse Gas Initiative for
December delivery fell 2 cents, or 1.1 percent, yesterday to
$1.88 on the Chicago Climate Futures Exchange, matching a record
low closing price set on Sept. 22. Each permit, also called an
allowance, gives a power plant the right to emit one ton of
carbon dioxide. The state-run carbon trading program covers
plants from Maryland to Maine.
U.S. Northeast carbon prices have fallen 18 percent this
year as the cap-and-trade bill faltered after narrowly passing
the Democrat-controlled House in June 2009.
Democrats from coal-producing states joined in campaign
attacks on cap-and-trade. Governor Joe Manchin of West Virginia
literally shot a hole through legislation labeled "cap-and-
trade" in a television commercial for his successful Senate
campaign.
Republicans in the next Congress are likely to increase
pressure on Obama to delay or scrap his plan to regulate carbon
through the Environmental Protection Agency, said Kevin Book,
managing director of ClearView Energy Partners LLC in
Washington.
EPA Regulation
Business groups such the American Petroleum Institute, the
largest U.S. lobbying group for the oil industry, have opposed
EPA regulation. Democratic Senator Jay Rockefeller of West
Virginia has sponsored legislation that would impose a two-year
delay.
The EPA is preparing to start regulating greenhouse gases
from power plants and oil refineries on Jan. 2. A U.S. Supreme
Court decision in 2007 said the EPA had the power to regulate
carbon as a pollutant under the Clean Air Act. Obama and EPA
Administrator Lisa Jackson have said they would prefer to tackle
the issue mainly through Congress.
Obama repeated this preference yesterday, saying the EPA
"wants help from the legislature on this."
"I don't think that the desire is to somehow be protective
of their powers here," he said.
Signaling Alternative?
Obama may be signaling a willingness to find an alternative
to EPA action, said Scott Segal, a Washington lawyer at
Bracewell & Giuliani LLP.
"The president didn't seem 100 percent resolute that the
agency has to regulate and regulate quickly," Segal, who
lobbies for coal-fired utilities such as Southern Co. and Duke
Energy Corp., said in an interview yesterday. "That may be a
sign that the administration is willing to sit down and discuss
a more reasonable path forward."
Any attempt by Congress to take away the EPA's power would
be vetoed by the president, Jackson said in an August interview.
The president remains committed to moving ahead with
"common-sense" EPA regulation of greenhouse gases, Heather
Zichal, deputy assistant to the president for energy and climate
change, said yesterday in an e-mailed response to questions.
Obama has pledged as part of United Nations-led climate
treaty talks to cut U.S. emissions about 17 percent by 2020. The
administration will stand by its target when countries meet to
negotiate in Mexico next month, Todd Stern, Obama's top climate
negotiator, has said.
An alternative to cap-and-trade legislation offered by
lawmakers such as Senator Jeff Bingaman, a New Mexico Democrat,
would set a national standard requiring the use of renewable
fuel such as solar and wind power. Senator Richard Lugar, an
Indiana Republican, has said he plans to introduce renewable-
energy legislation that would add nuclear and "clean-coal"
plants to the sources of alternative energy.
For Related News and Information:
Carbon Markets: EMIS <GO>
Top Environmental Markets News: TOP ENV <GO>
News about the EPA: NI EPA <GO>
News about the White House and climate change:
TNI EXE CLIMATE <GO>
Northeast U.S. trading: RGGI <GO>
--With assistance from Jim Snyder in Washington. Editors:
Larry Liebert, Joe Winski
To contact the reporters on this story:
Kim Chipman in Washington at +1-202-624-1927 or
Kchipman@bloomberg.net; or
Simon Lomax in Washington at +1-202-654-4305 or
slomax@bloomberg.net.
To contact the editor responsible for this story:
Larry Liebert at +1-202-624-1936 or
LLiebert@bloomberg.net.
