Obama unveils plans for carbon cap and trade

US presidential candidate Barack Obama has announced plans for a US-wide carbon emissions trading scheme as part of a major new energy strategy designed to slash carbon emissions by 80 per cent on 1990 levels by 2050.

In a speech delivered in Portsmouth New Hampshire, the Democratic hopeful said the trading mechanism would be supported by a $150bn investment over the next 10 years in clean technology, as well as an energy efficiency programme designed to cut the US economy's energy intensity in half by 2030.

He added that if elected he would also set targets to cut oil consumption by 35 per cent by 2030 and ensure the US takes a leadership position in international climate change negotiations.

The idea of cap and trade programmes – such as that currently operating in Europe whereby a set quantity of carbon credits are allocated and those firms that exceed their quota have to buy in extra credits from those that do not use all their allowance – has been endorsed by several US presidential candidates, including Obama's rival Democratic runner John Edwards.

But Obama insisted that unlike Edwards' proposed scheme, his plan would see all firms have to pay for their assigned credits at auction rather than having them initially assigned for free by industry.

"The market will set the price, but unlike the other cap-and-trade proposals that have been offered in this race, no business will be allowed to emit any greenhouses gases for free," he said.

This auction approach would effectively introduce a tax on carbon emissions and would be likely to add significant costs for businesses operating in the US. But Obama's camp argued that it would ensure polluters pay for all emissions, creating a major incentive for them to achieve cuts in their carbon footprint.

The announcement is likely to be welcomed by European politicians who are still smarting over their treatment at President Bush's recent conference of the world's largest emitters. According to BBC reports, several attendees at Bush's Washington conference are furious at being denied the opportunity to voice their concerns in public and feel they were outmanoeuvred in the press by the White House's media machine.

With Bush repeating his refusal to countenance binding emissions cuts, European negotiators are now reliant on the next incumbent of the White House to deliver a global successor to the Kyoto Treaty. As such they will have been heartened by Obama's latest plans, as well as recent calls for quantifiable carbon emission reduction targets from his rival Democratic presidential frontrunners, Hillary Clinton and John Edwards, and support for climate change legislation from Republican candidate John McCain.

Meanwhile, one US energy official last week predicted carbon regulation "of some sort" was now inevitable, despite the Bush administration's opposition to anything bar voluntary emission reduction programmes.

According to Associated Press reports, Dan Arvizu, director of the National Renewable Energy Lab of the Department of Energy, said that the position of the administration "was beginning to evolve" and as such carbon legislation was likely.

"I am neutral as to which kind of carbon management regulation there will be, " he is quoted as saying. "[But] it is very clear to me that there will be carbon management, whether it will be a direct tax, carbon cap-and-trade or some other instrument."