US legislators to move on cap-and-trade before June

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.

This article first appeared at BusinessGreen.com's sister title Energy Risk