Cap-and-trade program

This message was edited 1 time. Last update was at 29/06/2009 22:28:16

Obama's Draft Budget Projects Cap-and-Trade Revenue

President Obama's budget includes several principles on what the administration wants to see out of a cap-and-trade program, including emission targets that cut U.S. greenhouse gas levels 14 percent from 2005 levels by 2020. Obama also wants mid-century cuts of 83 percent from 2005 levels.

The budget also includes revenue from a national cap-and-trade system for greenhouse gas emissions, which would come from auctioning off emissions permits to industries. The climate program would generate nearly $650 billion between 2012 and 2019, according to Obama's proposal.

About $80 billion of the climate revenues would go toward Obama's proposed annual middle-class tax cut beginning in 2012, and the government would spend $15 billion per year on "clean" energy technologies, including wind power, solar power, advanced biofuels, "clean coal," and more efficient cars and trucks.

The budget also calls for a $19 million increase for U.S. Environmental Protection Agency to use on a greenhouse gas emission inventory. The inventory is expected to identify baseline levels of carbon emissions and set the foundations for a national cap-and-trade program.

EPA Calls CO2 a Danger to Public Health

WASHINGTON -- The Environmental Protection Agency has sent the White House a proposed finding that carbon dioxide is a danger to public health, a step that could trigger a clampdown on emissions of greenhouse gases across a wide swath of the economy.

If approved by the White House Office of Management and Budget, the endangerment finding could clear the way for the EPA to use the Clean Air Act to control emissions of carbon dioxide and other greenhouse gases believed to contribute to climate change. In effect, the government would treat carbon dioxide as a pollutant. The EPA submitted the proposed rule to the White House on Friday, according to federal records published Monday.

The 99-year-old Capitol Power Plant, which heats and cools Congress, burns coal.

Such a finding would raise pressure on Congress to enact a system that caps greenhouse gases -- which trap the sun's heat in the earth's atmosphere -- and creates a market for businesses to buy and sell the right to emit them, as President Barack Obama has proposed.

A White House representative said Monday that Mr. Obama's "strong preference is for Congress to pass energy security legislation that includes a cap on greenhouse-gas emissions. The Supreme Court ruled that the EPA must review whether greenhouse-gas emissions pose a threat to public health or welfare, and this is simply the next step in what will be a long process that engages stakeholders and the public."

The administration has proposed a cap-and-trade system that could raise $646 billion by 2019 through government auctions of emission allowances. Environmentalists want the administration to act on climate change before December, ahead of talks aimed at forging a successor to the Koyoto Protocol, the 1997 agreement that commits many industrialized countries to reducing their greenhouse-gas emissions.

EPA spokeswoman Cathy Milbourn declined to comment on the details of the endangerment proposal, saying it is "still [an] internal and deliberative" document. But in a move that indicated the potential scope of regulation, the agency earlier this month proposed a national system for reporting carbon-dioxide and other greenhouse-gas emissions by major emitters. The EPA has said about 13,000 facilities, accounting for about 85% to 90% of greenhouse gases emitted in the U.S., would be covered under the proposal.

Industry officials say it will still take months, possibly even years, for the administration to finalize rules for regulating greenhouse-gas emissions.

According to an internal document presented by the EPA to White House officials earlier this month, the EPA believes the health effects of elevated greenhouse-gas levels could cause "severe heat waves...with likely increases in mortality and morbidity, especially among the elderly, young and frail." The agency also said climate change caused by higher greenhouse-gas levels could result in more severe storms and more suffering related to "floods, storms, droughts and fires."

Business groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers warn that if the EPA moves forward on regulation of CO2 under the Clean Air Act -- instead of a measured legislative approach -- it could hobble the already weak economy.

Coal-fired power plants, oil refineries and domestic industries, such as energy-intensive paper, cement, fertilizer, steel, and glass manufacturers, worry that increased cost burdens imposed by climate-change laws will put them at a severe competitive disadvantage to their international peers that aren't bound by similar environmental rules.

Environmentalists have called for the endangerment finding, and say action by Congress or the Obama administration to curb greenhouse gases is necessary to halt the ill effects of climate change.

Senate Slams Door on Fast-Track Budget Procedure for Climate Bill

The Senate last week all but closed the door on the possibility of passing climate change legislation through the filibuster-proof budget reconciliation process. It approved, 67-31, an amendment to the fiscal 2010 budget resolution from Sen. Mike Johanns (R-Neb.) that would put major hurdles in the use of reconciliation for the purposes of moving a cap-and-trade bill.

Twenty-six Democrats voted with Senate Republicans in favor of the amendment.

The Johanns amendment states that the reserve fund for climate and energy legislation in the budget resolution cannot be used if climate change is moved through the reconciliation process. That means the revenues created by a federal cap-and-trade program could then not be used as offsets for federal spending.

Many top Democrats—including Budget Chairman Kent Conrad (D-N.D.)—had repeatedly said that they do not believe reconciliation is an appropriate way to move such legislation.

European Commission set the price of carbon at 30 Euro/ton.

House approves cap-and-trade bill, 219-212

Late Friday afternoon, the House of Representatives voted 219-212 to approve a comprehensive global warming bill that sets mandatory limits on U.S. greenhouse gas emissions.

211 Democrats and eight Republicans voted to adopt the sweeping legislation following a frenzied final week of lobbying that included personal pleas from President Obama.

The U.S. Senate has pledged a fall floor debate following markups in the Environment and Public Works Committee and several other panels.

The Democrat-written House bill (H.R. 2454) is more than 1,500 pages long and orders major industrial sources of greenhouse gases to enter into a cap-and-trade program that requires a 17 percent cut in domestic emissions by 2020. It also orders utilities to supply 15 percent of their power sales from qualified renewable sources of electricity by 2020.

"Notably, the legislation includes provisions directed to protect domestic manufacturers of energy intensive products, such as cement, from unfair trade practices. These industries would be granted free emission allowances under the cap and trade program which would be established by the legislation."

Additionally, several policies and programs long sought by environmental groups were included.

Republicans lost, 172-256, on their alternative approach that would have set a goal for the United States to reach 50 percent energy independence in a decade and 100 percent energy independence in 20 years.

Senate Energy Chairman: Cap & Trade Unlikely in 2010

The Senate Energy and Natural Resources Committee chairman says it's unclear whether Congress will be able to pass cap and trade legislation aimed at reducing greenhouse gas emissions this year.

Sen. Jeff Bingaman said Tuesday there's no consensus on what form a cap and trade system would take.

The New Mexico Democrat says there's a strong desire in both chambers to pass other energy-related bills that would reduce emissions. Carbon emissions are blamed for global warming.

Bingaman was in Albuquerque to tour Schott Solar Inc.'s manufacturing plant, where both photovoltaic panels and thermal receivers for solar power plants are produced.

Schott officials say state and federal policies are helping set the stage for their success, as well as the nation's transition to renewable energy.

Carbon trading resources

How do the big cement companies treat carbon credits on their accounting books?

As assets, and if so are these being actively hedged in the markets through futures?

Lucky Cement earns carbon credits

KARACHI: The Lucky Cement, through its waste heat recovery project — a power generation unit that does not require any external fed fuel to operate and uses the wasted heat from the system as its fuel — has managed to substantially reduce carbon emissions, says a press release of the company.

It qualified the company for the clean development mechanism under the Kyoto Protocol and earned itself precious carbon credits.

The estimated annual CO2 reduction by virtue of WHR plant at its Pezu Plant is 29,918 metric tons and by WHR at Karachi Plant is 50,000 metric tons. Lucky Cement’s innovation is thus preserving environment, curtailing its energy needs and saving cost in a unique way.

The clean development mechanism allows emission-reduction projects in developing countries to earn certified emission reduction credits.

These carbon credits can be traded and sold and are used by developing nations to finance their industrial projects. One allowance or certified emission reduction is equivalent to one metric ton of CO2 emissions.

These allowances can be sold privately or in the international market at the prevailing market prices.

These are traded and settled internationally and hence allow those credits to be transferred between countries.

Each international transfer is validated by the UN Framework Convention on climate change.

Australia's carbon tax will be set at 24.8 U.S. dollars per tonne (23 Australia dollars per tonne) starting from July 1, 2012. Is this price sustainable?