Copenhagen (Platts)--17Mar2009

The US government will likely continue to remain opposed to the use of
international carbon offsets to reduce greenhouse gas emissions in any
successor agreement to the Kyoto Protocol despite the developing world already
banking on the continued use of the credits post-2012, Citigroup head of
emissions markets Garth Edward said Tuesday.

The US government is happy to host regional carbon cap-and-trade systems
that include domestic offsets, but there is "no demand" for UN Certified
Emission Reductions offsets in any regional system for several reasons,
chiefly that President Barack Obama is "not strong enough" to force Congress
to accept the use of the credits, Edward told Point Carbon's Carbon Markets
Insights 2009 conference in Copenhagen.

Edward said that -- within the debate between Obama and Congress -- the
principle of "tax versus trade," the future structure of a US emissions
trading scheme and "economic nationalism" are the key elements blocking US
government acceptance of the use of offsets to mitigate higher prices.

"There are some positives though. The US federal [cap-and-trade system]
will likely be much wider than the EU ETS, and this will force Canada to act,"
Edward said.

Edward added that the northeast US' Regional Greenhouse Gas Initiative
"will probably be oversupplied" and will not need to bring in international
offsets to mitigate higher prices.

"The [federal US] ETS will likely have some kind of price intervention
and an auctioning role still has to be defined. Anything that happens in the
US will be bigger than what is going on in the EU though, notably by the
inclusion of car tail pipe emissions," he said.

--Russell Dinnage, russell_dinnage@platts.com