Washington  (Platts)--3Oct2007

A key Democrat in the US House of Representatives is poised to introduce
an economy-wide cap-and-trade system on all greenhouse gas emissions. 

     House Energy and Commerce Committee Chairman John Dingell, a Michigan
Democrat, on Wednesday released a white paper outlining a proposal to reduce
emissions by 60% to 80% by 2050. 

     "This is an ambitious target and one that we believe is best achieved
with a cap-and-trade system" because of emissions certainty, Dingell
and Energy and Air Quality Subcommittee Chairman Rick Boucher -- a Virginia
Democrat -- wrote in a letter to their Energy and Commerce colleagues.

     The white paper states the program will include all GHGs -- carbon
dioxide, methane, nitrous oxide and three flourinated gases. 

     A cap-and-trade system sets an annual hard cap for emissions allowances
and each company receives a set number of allowances to meet its emissions
quota. Companies then can buy or sell based on how well they reduce emissions.

     A similar system was developed in 1990 for sulfur dioxide and nitrogen
oxide in the electric power sector.  

     Under the proposal, the electricity, transportation, commercial,
residential and agricultural sectors all will be included in the program, but
in different ways and at different points of regulation. It is not clear how
nuclear power and renewable energy, both forms of zero-carbon power, would be
included in the scheme. 

     The electric power sector, which contributes 34% of US emissions, would
be regulated at the point of emissions -- the power plant smokestack. 

     For the transportation sector, which contributes 28% of US emissions,
Dingell and Boucher concluded that regulating oil companies and refineries for
the carbon content of their fuel is the most promising method, because
regulating tailpipe emissions is far too burdensome.

		--Alexander Duncan, alexander_duncan@platts.com