Senator John Kerry, a leading architect of climate change legislation being drawn up in the U.S. Senate, on Wednesday said the bill will have tough controls to stop abusive financial market speculation on pollution permits that will be traded among companies.
There will be no derivatives, there will be no credit swaps, Kerry said in response to a question following a speech at the National Press Club that focused mainly on U.S.-China efforts to control climate change.
The details of a Senate bill are expected to be unveiled in a month or so.
There will be tighter regulatory control on this (than in a House-passed measure) so that it will be impossible to play any kinds of those games, Kerry added.
Following his speech, Kerry was pressed for details by reporters and he retreated somewhat from his tougher statement on derivatives and swaps.
Saying details were not yet finalized, Kerry added, I'm not saying there may not be a derivative or a securitization.
But he added: There will be no monkey business. There's not going to be any untransparent, unaccountable, speculative kinds of games that can be played.
Under cap and trade legislation passed in June by the House of Representatives and being mulled in the Senate, U.S. industry emissions of carbon dioxide and other greenhouse gases blamed for global warming would gradually decline. Companies would need permits to emit the pollutants, but they could buy and sell those permits as needed on a market exchange.
Senate Environment and Public Works Committee Chairman Barbara Boxer hopes to formally introduce a bill in early September that she and Kerry are writing along with other Democrats.
While they hope for a vote by the full Senate in October, Kerry, in his speech, repeatedly said that a time-consuming debate on an unrelated healthcare reform bill in Congress could delay the environmental bill this year.
With the U.S. economy reeling from a deep recession caused in part by financial market woes and poor government regulation of the banking industry, many lawmakers are skittish about setting up the climate control trading system, which also could bring somewhat higher energy prices to consumers.
Kerry said the tough regulatory controls to be included in the upcoming climate bill were in response to what happened in the markets the last several years and because of recent reports of oil market speculation.
A number of senators have expressed concerns about that. We want to respond to their concerns, Kerry told reporters.
Under the House-passed bill, U.S. carbon emissions would have to drop by 17 percent by 2020 and 83 percent by 2050, from 2005 levels.
By encouraging the broader use of alternative energies like solar and wind power to replace dirty coal- and oil-burning utilities and manufacturing, the legislation would fundamentally change the way energy is produced in the United States.