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Copenhagen to set international context for US carbon market

Copenhagen to set international context for US carbon market

/EIN Presswire/ State and federal regulations likely, even if conference fails, and Senate stalls

High-level carbon markets conference in Florida in January to consider outcomes

As the Copenhagen climate talks approach their conclusion, the likely interconnections between a potential US carbon market and the international climate effort are becoming clearer.

The meeting in Copenhagen is intended to set the framework for an international post-2012 climate change regime, including emissions targets for industrialised countries, including the US, alongside finance for poorer countries to adapt to climate change, and commitments from larger developing countries on restricting their emissions growth.

Senator John Kerry - who has recently set out the principles for a compromise climate change bill with Senators Lindsey Graham and Joseph Lieberman - was due to address the climate talks on Wednesday 16 January. He was to give his views on the key steps the negotiations must take, and reinforce the State Department's message that the US is moving forward with domestic climate change legislation.

Eileen Claussen of the Pew Center on Climate Change stated that Copenhagen is likely to provide momentum for climate legislation in the US Senate. A successful outcome in the Danish capital - which is by no means assured, at the time of writing - would hopefully galvanise Senators mulling Kerry's proposal.

But a huge number of variables are in play. Almost any cap-and-trade system likely to pass Congress would place a heavy reliance on the use of offsets, both from domestic emission reduction credits and from overseas projects.

It is likely to prove transformative for the fortunes of leading US-based environmental investment companies, such as C-Quest Capital, MGM Innova and CE2 Capital Partners. All three will be presenting at Carbon Markets North America 2010, to be held in Miami FL on 21 and 22 January.

However, even if Copenhagen does not lead to a breakthrough - and the Senate stalls on climate and energy legislation - US industry still faces carbon constraints and, worse, a patchwork of regulations. As the Copenhagen talks started, the Environmental Protection Agency stated that it is to begin the process of regulating greenhouse gases (GHGs) under the Clean Air Act.

Meanwhile, state and regional initiatives - such as California's AB 32 regulations, which would cap GHG emissions in the state from 2012 - would move ahead.

All this will lead to costs for business - and opportunities for low-carbon entrepreneurs. Steve Fine of leading consultancy ICF International - another speaker at the conference - told Environmental Finance magazine: "In the past, we thought these [regional systems] would be quickly subsumed into a federal programme. Now, it's clearer that they may be around for some years. That opens a whole flurry of questions - will there be federal exemption, will there be transfer of credits, what sort of offsets will be eligible, what will happen to auction revenues from existing schemes?" he said.

While the picture may be a little clearer in January, it's likely that US industrial emitters - and potential players in the country's carbon market - still face more questions than answers.

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For further details, please contact:

Mark Nicholls
Editor, Environmental Finance magazine
Tel: +44 207 251 9151
E-mail: mark@environmental-finance.com

Notes for editors:

Environmental Finance Publications publishes magazines, books and directories and produces conferences covering the intersection of environmental issues and the financial sector. Its flagship publication, Environmental Finance magazine, covers climate change, emissions trading, renewable energy finance, responsible investment and weather risk management, among other subjects. While its monthly Carbon Finance newsletter covers the carbon markets exclusively. For details please go to www.environmental-finance.com


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