Greenhouse emissions credits are essentially buying and selling the right to pollute.

If the United States embraced Kyoto-like limits, it could spawn a trading market with an annual value from $41 billion to $77 billion, the Pew Center said.

"If the United States ever moves to a cap-and-trade environment, we'll have a substantially bigger market than Europe," said Andy Ertel, president of Evolution Markets LLC, a brokerage firm active in other US emissions markets.

Under cap-and-trade, businesses are required to cut carbon emissions to a set level, or buy credits from companies that have complied with limits.

The Bush administration and Republican leaders in Congress oppose limiting carbon dioxide emissions, preferring voluntary industry efforts.

"Addressing the risk from climate change poses a different challenge and requires a fundamentally different, longer and technology-based approach," a White House spokeswoman said.

A US cap-and-trade greenhouse gas program would boost consumer energy bills and affect jobs and economic growth, the spokeswoman said.

The United States is the biggest emitter of greenhouse gases, which are linked to a gradual rise in the earth's temperature.

But so far, formal trading of US greenhouse gas emissions credits is done only voluntarily, a fact reflected in prices.

A US contract for the right to emit one metric ton of carbon dioxide fetches about $2 on the Chicago Climate Exchange, a voluntary market.

But a similar contract hit a record 29 euros (US$35.67) last month on the European Climate Exchange, run by London's International Petroleum Exchange and the Chicago Climate Exchange.

PRESSURE FROM STATES

Steam is gathering among several US states for action.

Earlier this week, officials in nine Northeastern US states reached a preliminary agreement to cap and then cut emissions from power plants by 10 percent by 2020. Similar plans are afoot in California, Washington and Oregon.

"The state and regional programs are really going to force the federal government to step up to the table," Ertel said.

Meanwhile, some US companies are experimenting with carbon trading at the fledgling Chicago Climate Exchange. That marketplace has attracted some heavy hitters like American Electric Power and Ford Motor Co.

"It takes money, it takes time, and it takes effort to track what your emissions are," said Dennis Welch, a senior vice president at AEP, a major US utility. Mandatory limits may be inevitable, but "right now the voluntary approach is the only way we're willing to go," Welch said.

U.K. oil major BP Plc., which is active in the EU market, said mandates are one of the best ways for the US government to put industry in sync with other trading systems globally.

In 2002 BP committed to hold its greenhouse gas emissions at 10 percent below 1990 levels through 2012.

Mandatory programs "are the right way to go with government setting the cap and providing the level playing field," said Mark Proegler, director of BP's Emissions Markets Group.

"To see material trading in the States requires mandatory programs," echoed Steve Drummond, managing director of Co2e.com LLC, an emissions-trading arm of the Cantor Fitzgerald group.

Not true, said Richard Sandor, chairman of the Chicago exchange. "We think it is going quite well in the United States," he said.

Skeptics say voluntary caps will keep US industry on the sidelines.

"There is very little evidence that corporate America has any real interest in participating in a voluntary greenhouse gas reduction trading program," said Ethan Podell, a former Chicago Climate Exchange vice president of marketing, now president of Orbis Energy Advisors Inc., a consultant.

Absent from the Chicago exchange are large oil and gas companies, industrial cement makers and other large utilities that emit the lion's share of emissions, Podell said.

The United States pioneered the cap-and-trade market model that the EU has adopted for greenhouse gases.

A vibrant market for acid rain emissions credits began with state-specific limits that eventually spurred Congress in 1990 to pass the Clean Air Act, which created a federal mandate to trade sulfur dioxide and nitrogen oxide emissions credits.

Emissions of those pollutants fell sharply in the past 15 years through a trading system run by the Environmental Protection Agency. The two markets are worth about $3.45 billion annually, according to Pew Center data.