Cap and Trade Rules
US Legislators to Move on Cap-and-Trade Before June

Pauline McCallion
February 12, 2009

Chair of House Energy and Environmental Subcommittee says he wants to see legislation drafted by the summer

Draft climate change legislation will be presented to the US House of
Representatives by 25 May, according to Representative Edward Markey, chairman
of the House Energy and Environmental subcommittee.

The committee's aim, Markey said, is to complete draft legislation addressing
the issue of climate change and present it to the House of Representatives by
Memorial Day this year.

Speaking to delegates at the CERAWeek 2009 conference earlier this week, he said
the aim was to take some kind of legislative action before the United Nations
Climate Change conference in Copenhagen in December 2009. He added that any
final bill should be science-based, technology-driven and consumer focused.

His comments follow an announcement earlier this month by Senator Barbara Boxer,
chairwoman of the Senate Environment and Public Works committee, who confirmed
work on draft climate change legislation would begin this year.

According to Markey, introducing a market-based element to efforts to reduce
carbon emissions would fuel commercial investment in clean technologies.

"If you change a market's incentives, you can change the entire industry," he
said, adding that the 1990 Clean Air Act which introduced a cap-and-trade
scheme for sulphur emissions in the US proved that market-based solutions can
help to achieve environmental aims in a cost-efficient manner, and that
innovation can be encouraged by the right incentives.

Although the details of any draft legislation are yet to be decided, Markey
indicated that consideration may be given to help industries with strong
overseas competition, possibly in the form of a longer pre-compliance period.
"Certain industries are more vulnerable to foreign competition, such as steel,
iron, cement and aluminium producers," he said. "More details in this area will
emerge during committee hearings and discussions."

Tony Hayward, group chief executive of BP, voiced his support for a ca
p-and-trade scheme when he spoke to delegates at CERAWeek. He suggested a number
of policy suggestions for the new administration such as promoting greater
co-operation between energy companies, the government and academia, making
energy efficiency and conservation a top priority and encouraging investment in
technology, research and development and deployment within the energy sector.
"Cap-and-trade will provide environmental certainty, based on the cap," he said,
adding that he wanted to see President Obama back up his commitment to tackling
climate change with clear policy moves.

However, Michael Dolan, senior vice president of Exxon Mobil, later argued that
a tax on carbon would be "better positioned" to reduce greenhouse gases. He said
direct taxes on carbon emissions would provide greater transparency, simplicity
and regulatory predictability than cap-and-trade schemes where the price of
carbon could fluctuate over time, making investment decisions harder to calculate.


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