Environmental Markets Association

Why US Carbon Prices Will Be Low

Byron Swift and Aldyen Donnelly argue that the US will be a net seller of carbon.

Financial signals show that the price of carbon reductions in the United States to meet the Kyoto Protocol would be low – less than $6 per ton of carbon dioxide (CO2), or $20 per ton of carbon. This low price indicates quite clearly that most US carbon reductions will be achieved domestically, international trading will be less than expected, and the US will likely be a net seller of carbon to Europe and Japan.
One set of market indicators comes from current US greenhouse gas (GHG) trading activity by potentially affected firms. Although these are unregulated transactions, tens of millions of tons of CO2 have been traded at prices less than $1 per ton.

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