Futures contracts in the U.S. Northeast’s carbon market fell to their lowest level in six weeks after President Barack Obama backed away from the national cap-and-trade program he once sought.
“Cap-and-trade was just one way of skinning the cat,” Obama said at a White House news conference today, one day after the Democratic Party lost control of the House of Representatives to Republicans.
The Democratic president said a cap-and-trade program, in which companies buy and sell carbon dioxide allowances, is “not the only way” to cut greenhouse gases.
“I’m going to be looking for other means to address this problem,” Obama said.
Permits from the Regional Greenhouse Gas Initiative for December delivery fell 2 cents, or 1.1 percent, to $1.88 each at on the Chicago Climate Futures Exchange, matching a record low closing price set on Sept. 22. Each permit, also called an allowance, gives a power plant the right to emit one ton of carbon dioxide. The state-run carbon trading program covers plants from Maryland to Maine.
U.S. Northeast carbon prices have fallen 18 percent this year as cap-and-trade legislation, which Obama asked Congress to pass in his February 2009 budget proposal, stalled in the Senate after narrowly passing the Democrat-controlled House.
Prices today touched $1.85, a record intraday low that was below the minimum allowable bid of $1.86 in carbon dioxide allowance auctions held by the Northeastern states every quarter.
The price of Northeast permits has been “propped up by some confidence that they could be converted into federal allowances” if legislation establishing a national cap-and-trade system passed Congress, said Peter Shattuck, a carbon markets policy analyst at Rockport, Maine-based advocacy group Environment Northeast.
A federal carbon market is now “more remote” than before the election because “the vast majority of Republicans have opposed cap-and-trade proposals to date,” Shattuck said in a telephone interview.