As 2010 unfolds, intensive negotiations are unfolding within the United States Senate as focus turns toward climate change legislation this year. It seems quite a long time ago that the House of Representatives passed the American Clean Energy and Security Act, with the aim of bringing carbon legislation to the desk of the President. However, the Senate was not quite so sure.
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 is essentially a hybrid utility carbon market, which is another angle for consideration by legislators.
There are many contentious and divisive issues facing the Senate and it is difficult to know how far climate change legislation will be allowed to advance in this environment during 2010. It is very unfortunate that political elections scheduled for November of 2010 are being touted by many as the main reason for potential delays and it could well be that we will have to wait until 2011 for real action.
Many argue that widespread support for controversial “cap and trade” legislation has waned somewhat, especially as political attention was focused on health care 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.
One of the major issues facing legislators and championed by detractors of the current initiative is the provision that allows shorelines and oceans offshore to be opened up to oil and gas 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.
As companies large and small come to the realization that some form of carbon market may well be in evidence within the years ahead, they should realize that they will, in one form or another, be more liable for the energy that they use within their daily 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 accelerating, 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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