Sandor expects U.S. climate law by April 2010

By Christine Stebbins

CHICAGO (Reuters) - Richard Sandor, founder and chairman of the Chicago Climate Exchange, said on Tuesday that he expects the U.S. Congress to pass a comprehensive climate change bill by April 2010.

"I'm an economist, not a political forecaster. But if I were then to take a shot ... I would make a market of October 1 '09 to April 1, '10. I do think there is a chance that we can get it done in that time frame," Sandor told Reuters in an interview.

Sandor, an innovative and key figure in the history of the global derivatives industry as the creator of some of the first financial futures markets, also said that regulation of carbon trading and exchange-cleared contracts is essential.

It is "critical," he said. "You can't mess around when there is a daily transparent market."

Sandor also scoffed at notions of "carbon taxes" as out of date and said that it was more realistic to expect regional carbon-trading schemes to develop first around the world before any global scheme could be effective.

"Carbon tax is 20th century. It's not 21st century," he said.

U.S. President Barack Obama will chair a meeting of the world's top greenhouse gas emitters at the G8 talks in Italy on July 9. Obama is a strong backer of climate legislation that includes carbon trading, which has passed the U.S. House of Representatives but faces opposition in the Senate.

"I'm not sure that we are going to get a global agreement in the foreseeable future," Sandor told Reuters, discussing hopes for a global pact at the United Nations climate meeting in Copenhagen in December.

"I think we are going to end up with a pluralateral trading regime. By that I mean pockets of markets around the world, one in Europe, one in North America, one in Japan, probably Australia -- ultimately China, India in their own fashion," Sandor said.

"They will be linked by certain contracts, which will be deliverable worldwide, like certified emissions reductions from the United Nations."

Sandor is executive chairman of Climate Exchange PLC, which owns not only the CCX but the European Climate Exchange, a key part of the European Union's carbon trading scheme put in place after the U.N.'s Kyoto Protocol in 1997.

"I happen to think it's going to be like cotton was in the 19th century," Sandor said, referring to markets that developed in Liverpool, New Orleans, New York and other places that gradually evolved into one standard.

"There are cultural differences which make a uniform international market hard to accomplish. I still think you can get to the social objectives by having local markets -- five or six of them linked by arbitrage," he said.

Sandor is widely sought as a consultant by governments and industry. He is a member of the International Advisory Council of Guanghua School of Management at Peking University.

(Reporting by Christine Stebbins of Chicago Commodities and Ceci Rodgers of Reuters Television)