According to a report by New Carbon Finance, the US will be home to about US$1-trillion carbon emission market by 2020 if government policymakers continue on their current path toward a comprehensive cap-and-trade program confined to the domestic market.
The report, which analyzes the 13 climate-change bills under consideration by the US Congress, also found that a cap-and-trade system that permits only domestic trades will produce a carbon price of US$40 per metric ton as early as 2015, resulting in a 20% increase in retail electricity prices, a 10% hike in natural gas costs and a 12% increase in gasoline prices.
However, the increase in prices of energy could be further adjusted downward by allowing carbon-constrained US firms to trade with, say, firms in China or India, where emission-reduction measures are cheaper. Such would yield an estimated US carbon price of as low as US$15 per metric ton, saving the US economy $145 billion annually. At that price, the increase in electricity prices would be held to 7%, while gasoline prices would rise only 4% and natural gas prices would increase 5%, according to studies.
*Source: http://www.platts.com
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