"Derivatives Bill Calls For U.S. Carbon Market Study"

"A tough new proposal to regulate U.S. markets calls for top regulators and government officials to conduct a study on transparency in emerging U.S. carbon markets as part of the financial reform package.

The heads of the Treasury Department, the Commodity Futures Trading Commission and other U.S. agencies would be required to study oversight of existing and prospective carbon markets, according to the proposal, part of a bill passed by the Senate Agriculture Committee this week.

The goal of the study is 'to ensure an efficient, secure, and transparent carbon market, including oversight of spot markets and derivative markets,' the bill said.

Senator Blanche Lincoln's Agriculture Committee voted to advance the bill this week. It will be merged with the Senate Banking Committee's financial reform package, expected to be debated next week, which will likely include a crackdown on the unregulated $450 trillion derivatives market.

Emerging carbon markets are either voluntary or regional because the U.S. government does not limit emissions of gases blamed for warming the planet, considered a requirement before the launch of a national market.

Ten states in the U.S. Northeast operate a carbon market on power plants. In addition, the Chicago Climate Exchange also runs voluntary carbon markets.

Some critics of carbon markets say that not all of the credits that are traded in them represent true emissions reductions."

Timothy Gardner and Roberta Rampton report for Reuters April 23, 2010.