Senator Snowe Agrees to Cosponsor Feinstein Measure to Establish Federal Oversight for New Carbon Markets
- Measure also endorsed by a number of public utilities and consumer groups -
Jan 25 2008
Washington, DC – U.S. Senator Olympia Snowe (R-Maine) today announced her support for a measure sponsored by Senator Dianne Feinstein (D-Calif.) to establish federal oversight for new carbon emissions trading markets.
The measure also has the support of public utilities in California and across the country, as well as a number of consumer groups.
The legislation, introduced on December 6, 2007, is designed to prevent future Enron-like fraud and manipulation in greenhouse gas emissions credit markets – billion-dollar markets that are expected to develop once Congress approves comprehensive climate change legislation that includes a cap-and-trade system for the trading of emissions credits.
“Senator Snowe’s support is critical,” Senator Feinstein said. “Senator Snowe was there every step of the way – on fuel economy, on closing the Enron loophole, and now on carbon market oversight. This gives the effort a significant boost. And I thank her for joining me once again.”
“The Senate will soon be debating climate change legislation to establish a domestic carbon cap and trade program for CO2 emissions reductions throughout the economy. This will create a new valuable commodity by setting up carbon emission allowances that could generate more than $7 trillion in allowance value over the life of the 38 year program and could unfortunately create opportunities for abuse and manipulation,” Senator Snowe said. “I am pleased to join with Senator Feinstein to take proactive steps to protect the integrity of these emerging real-time, forward, futures, and options markets to allow for fair competition that is in the public’s interest, and I appreciate the support for our bill from major national groups who purpose is to protect millions of consumers and power customers alike.”
The groups that have endorsed the legislation together represent more than 50 million consumers and provide power to more than 30 million customers. The groups include:
- American Public Power Association
- Consumer Federation of America
- National Association of State Utility Consumer Advocates
- Northern California Power Agency
- Oregon Municipal Electric Utilities
- PG&E Corporation
- Public Citizen
“We’ve got to learn from the past: as a new market is put together, it must have strong mechanisms in place to prevent fraud and manipulation. But we can’t get this done without support from consumers and industry,” Senator Feinstein said. “These groups recognize the challenge ahead. And they’re stepping forward to work with us to ensure that the market oversight we establish is good for industry and consumers alike.”
The Emission Allowance Market Transparency Act (S.2423)
The bill would establish transparency and anti-manipulation provisions modeled after energy markets protections that were created by the Energy Policy Act of 2005. Additionally, the legislation includes anti-fraud provisions and limits excessive speculation. The bill would establish strong financial penalties of up to $1 million fine and 10 years in jail for each offense.
Specifically, the bill would require the Environmental Protection Agency (EPA) to create a regulatory structure to oversee the new carbon credit markets that would be parallel to the system used by the Federal Energy Regulatory Committee (FERC) for the electricity and natural gas markets.
- The bill would require the EPA to:
- Publish market price data in order to increase market transparency;
- Monitor trading for manipulation and fraud; and
- Enforce position limits or position accountability levels to prevent excessive speculation.
- The bill would prohibit carbon traders from:
- False reporting;
- Engaging in manipulation or deception, as defined in the Securities Exchange Act; and
- Cheating or defrauding another market participant.
- Establishes a maximum $1 million fine and 10 years in jail for each offense.
Clarifies that the CFTC maintains its exclusive jurisdiction over futures markets, including carbon dioxide futures markets.