November 2, 2010 / 4:27 AM / 7 years ago

U.S. exchange's CO2 cap-and-trade to end: report

SINGAPORE (Reuters) - The United States' only national carbon trading scheme could be shut down within months because of stalled emissions trading laws in Congress, the Financial Times newspaper on Tuesday quoted a senior exchange official as saying.

The Chicago Climate Exchange (CCX) operates what it calls a voluntary but legally binding greenhouse gas emissions trading scheme in which companies have to meet annual reduction targets, or a cap. Those below the targets can sell surplus allowances or bank them.

But Jeff Sprecher, chief executive of the InternationalExchange and CCX's owner, told the Financial Times that participants in the CCX's cap-and-trade scheme wanted to pull out.

"The bulk of the users have said to us that they really don't want to continue to trade voluntarily in the absence of any credit for their work by the current administration," the newspaper quoted him as saying.

The lower house of Congress last year passed a climate bill that set a national 2020 emissions reduction target on greenhouse gas emissions as well as outlined a national emissions trading scheme.

But Senate Democrats slimmed down the bill in July, abandoning a cap-and-trade scheme aimed at cutting emissions.

Republicans are also expected to make big gains against the Democrats in Tuesday's mid-term elections, further diminishing the prospects of any climate legislation passing Congress in the near term.

Globally, the voluntary carbon market stalled in 2009 after six years of growth as the downturn in the global economy and uncertainty over future climate legislation curbed demand.

The market shrank 47 percent last year to $387 million and by 26 percent in volume to 93.7 million metric tons of emissions.

A strong result for Republicans, though, is unlikely to upset the only U.S. cap-and-trade scheme for the electricity sector, Thomson Reuters subsidiary Point Carbon News reported last week.

Ten northeast states participate in the Regional Greenhouse Gas Initiative that sets mandatory CO2 caps on power generators. Pollution permits are sold at auction and the states have so far earned $730 million from selling the allowances.

The scheme began at the start of 2009 and most of the money is used for programs to help consumers, including low-income families. But permit prices are currently trading close to the auction floor price of $1.86 a metric ton.

Reporting by David Fogarty; Editing by Michael Urquhart

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