Emissions traders expect U.S. carbon market soon

By Nina Chestney and Michael Szabo

BARCELONA (Reuters) - Carbon market professionals hope speedy U.S. Congressional approval of a federal cap and trade scheme will boost emissions trading, which is threatened by recession and slow U.N. climate talks.

The existing Kyoto Protocol laid the foundations for emissions trading, by imposing caps on emissions in Europe and other developed countries, which is driving a $92 billion European emissions trading scheme.

The world is meant to agree a successor treaty in December in Copenhagen, but talks have been slow as rich and poor nations squabble over sharing the cost of carbon cuts.

Meanwhile severe recession and falling industrial output and pollution means governments and companies are buying fewer rights to emit greenhouse gases - potentially undermining a $126 billion global carbon market.

Last Thursday, a U.S. House of Representatives committee voted in favor of a draft climate bill at the heart of which is a "cap-and-trade" system which, if passed into law, could put the world on track for a $3 trillion carbon market by 2020.

The plans await debate in other committees and a full House vote is needed before it can go to the Senate for scrutiny.

"It is still a tough haul," said Chelsea Maxwell, former climate change advisor to Senator John Warner, author of an earlier draft climate bill.

The December deadline for world leaders to agree on a new climate change pact to replace the Kyoto Protocol, which expires in 2012, may provide extra impetus to drive through the climate bill, analysts said. The move would show U.S. commitment to the international process.