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$1 Trillion U.S. Carbon Market Coming Soon

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A cap-and-trade system to regulate carbon has the support from the presidential candidates and seven bills chilling on Capitol Hill. But what would the carbon market for the country that is one of the world leaders in CO2 emissions be worth? Researchers at New Carbon Finance, a division of New Energy Finance, think they have an idea – a massive $1 trillion.

The researchers estimate that if Lieberman-Warner’s America Climate Security Act is passed then carbon prices will be $35 to $40 per ton by 2015 and $45 per ton in 2020, creating the world’s largest carbon market, trading $1 trillion of carbon credits a year.

But the problem with the carbon bills currently in Congress are that they tend to exclude interoperability with foreign carbon schemes. Most don’t allow for credits generated from the EU’s Emissions Trading System (EU-ETS), the Kyoto Protocol’s Clean Development Mechanism (CDM) and Joint Implementation (JI) schemes.

A U.S. carbon trading scheme that doesn’t work with international credits could push the cost of carbon to the high extremes of New Carbon Finance’s estimates. The research groups suggests that a carbon bill should deliver this interoperability.

“We believe that, to smooth the transition to a carbon-constrained economy, any climate change bill should provide for international project credits, currently available at $10 to $20 per tonne,” Milo Sjardin, heads of the North American division of New Carbon Finance.

Assuming that carbon costs $40 per ton by 2015, the average energy-sucking American Joe could expect to see his electric bill jump 20 percent, pay 35 cents more a gallon at the pump, and pay 10 percent more for gas, according to New Carbon Finance. And that doesn’t include the wide-ranging increases of cost of everything else that requires energy to manufacture or move.

Allowing international trading could drive the cost of credits down by as much as $15 a ton, the report estimates, saving America some $145 billion a year. Abatement is often far cheaper per ton overseas, and this outsourcing facilitates clean technology dissemination.

The New Carbon Finance researchers also foresee a “major” boost in domestic cleantech investment as well as the potential for a tariff to be levied by Congress on imported goods coming from non-carbon-constrained economies. The EU has brought this up as well and it likely can be done in compliance with WTO regulations.

Going it alone is the American way but hopefully Congress will account for the global economy and environment when they eventually start constructing what we’re calling the American Carbon Trading Scheme (ACTS anyone?).

4 Responses to “$1 Trillion U.S. Carbon Market Coming Soon”

  1. Green energy is definitely the best solution in most cases. Technology like solar energy, wind power, fuel cells, zaps electric vehicles, EV hybrids, etc have come so far recently. Green energy even costs way less than oil and gas in many cases.

  2. Sanjong Thapa

    …& for all the libs that screamed that the high price of oil was being manipulated…NOW WALL ST. TRADERS WILL MANIPULATE THE PRICE OF YOUR PIXIE DUST !!! HAHAHAHAHAHAHAHA!!!!!