A quick update on carbon goings-on

One of the interesting things to come out of Obama’s new budget is the assumption in there of revenue from implementation of a cap-and-trade scheme for carbon emissions reductions.

First of all, here’s a quick but compelling analysis by Chaz Teplin who points out that the revenue assumptions point to assumptions of fairly low (<$15/tCO2) market prices for carbon credits.  Chaz then points to what that price level might mean in terms of costs more familiar to most of us.

Secondly, here on this site we’ve previously discussed the challenges of getting to 60 (as in, Senate votes) on a cap-and-trade bill.  Well, now the inclusion of these revenues in the budget may be a hint along the lines of what got reported a couple of days ago:  That the “budget reconciliation” process may be used to prevent a filibuster on any climate regulation. That would be an interesting twist, although I continue to believe c&t legislation won’t come down to a party-line vote…

Finally, while all this goes on inside the beltway, outside regional leadership continues to push the ball forward regardless.  The latest move is by the city of San Francisco, which is launching a Carbon Collaborative designed to help make the city a hub for carbon trading.  [Mandatory self-promotion alert: One of my portfolio companies, Carbonflow, is involved in this effort]  It’s a sign of things to come, as we’re witnessing the birth of a new, multi-billion dollar commodities market.  Different regions will be vying to grab part of that, undoubtedly.  But of course, what happens inside the beltway will make a big difference on whether the nascent U.S. carbon trading industry will flourish, or languish while Europe takes all the action.

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