Restricting cheap carbon credits that can be imported from poor countries in a proposed U.S. cap-and-trade system will drive up costs for consumers, according to the Geneva-based International Emissions Trading Association (IETA), reports Bloomberg News.
The Senate Democrats proposal cuts the offset limits in half to 500 million tons per year from tropical rain forests and clean energy projects in developing countries compared to a plan passed by the U.S. House in June.
In a statement (PDF) about the U.S. Senate’s Kerry-Boxer draft legislation on energy and emissions trading, the IETA said depriving the U.S. carbon market of international offsets has no benefit, and would lead to higher costs and a less efficient, more volatile marketplace.
U.S. power plants, oil refineries and factories could use the offsets, each representing one metric ton of carbon dioxide, instead of the pollution allowances created by the cap-and-trade program to comply with new greenhouse-gas reduction targets, reports Bloomberg News.
The Environmental Protection Agency’s analysis of the House proposal said the price of carbon dioxide allowances in a U.S. cap-and-trade program would nearly double if cheaper offsets couldn’t be imported, reports Bloomberg.