Washington (Platts)--17Jul2009

A carbon emissions trading scheme that would be created under a
climate-change bill that the US House of Representatives passed in late June
would provide a "field day" for speculators, according to Senator Byron
Dorgan, a North Dakota Democrat who said he will not support any legislation
that limits carbon emissions through allowance trading.

In remarks he delivered Thursday on the Senate floor, Dorgan said while
he supports capping US carbon emissions, he believes that a carbon securities
trading system would be "ripe for the biggest investment banks and the biggest
hedge funds in the country to sink their teeth into these marketplaces and
make massive amounts of money."

The recent financial meltdown and sharp increases last year in the price
of oil and other commodities have shown that many trading markets "have been
manipulated and have failed to work at all with respect to the market signals
of supply and demand. I have very little interest in consigning our low-carbon
future to a trading system of carbon securities that will be controlled by the
biggest trading companies in the world," the senator said.

"And it will not be long before these entities will have created
derivatives, swaps, synthetic [collateralized debt obligations] and more. It
will be a field day for speculation, which I think is not in the interest of
this country."

Dorgan, one of a number of moderate Senate Democrats who have raised
concerns over the House bill, said what occurred in the oil futures market
last year -- when the price of oil rose from about $60/barrel to $147/barrel
in late July -- "should be a wake-up call."

Oil market speculators, he said, were trading at "20 to 25 times the
amount of oil that is produced every single day and creating an orgy of
speculation," he said. "If we like that sort of thing, we are going to love
the carbon market piece in cap and trade, because we are going to create a
big, perhaps trillion-dollar market for carbon securities.

"So do we want to sign up for a future in which we consign our ability to
constrain carbon and protect this planet by creating a carbon securities
market that, in my judgment, would likely subject us to the same vision of the
last decade with unbelievable speculation, movements in markets that seem
completely disconnected from supply and demand? That is not a future I want to
see happen."

Dorgan said he believes "there are other ways of capping carbon and
addressing these issues. I want to be clear, I am for capping carbon. I am for
a low-carbon future, but, in my judgment, those who would bring to the floor
of the Senate a replication of what has been done in the House, with over 400
pages describing the cap and 'trade' piece, will find very little favor from
me, and I expect from some others as well. There are better, other, and more
direct ways to do this to protect our planet."

Dorgan instead urged the Senate to pass a broad energy bill that the
Senate Energy and Natural Resources Committee recently approved, saying the
measure "moves in the direction of addressing climate change."

He added that the Senate "ought to explore a carbon cap with different
approaches," saying "there are some of us -- and I speak only for myself --
who believe cap and 'trade' in terms of speculative carbon futures markets
makes no sense.

"I wanted to raise these concerns at this point, so that those who are
working on the climate change bill and attempting to replicate the House
approach will understand that some of us will aggressively resist the carbon
market 'trade' side of cap and trade," he said.