February 14,2008

Baucus Explores International Carbon Cap And Trade Implications For U.S. Economy, Importance For Developing Nations

Chairman calls on U.S. to lead effort, seeks balance between environmental cost and economic sustainability

Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) in a series of
pointed questions today sought to clarify the implications of a mandatory carbon cap and trade
system for U.S. domestic industry and workers. A cap and trade program would allow dramatic
reductions in carbon emissions while sustaining economic growth. The system would set a “cap”
on the amount of total U.S. carbon emissions. Industries that emit carbon would then be required to purchase allowances for the carbon they emit, or could sell or trade excess allowances if they reduce their emissions. Chairman Baucus was particularly concerned with the consequences of such a system on the U.S. economy and with encouraging developing nations like China to adopt emissions limits of their own.

“Climate change could well be the most important issue of our time, and I advocate leadership and responsibility on this. The United States must lead, even if China and others are dragging their feet,” Baucus said. “We have an obligation to lead, but we must do so in a way that protects the American worker and encourages these other nations to join with us.”

Testimony from both private and public sector officials included lessons learned from the European carbon market, and the need for measures that will keep U.S. firms competitive despite the added costs of emissions reduction. Senator Baucus also requested comment from witnesses on ways to improve the Lieberman-Warner bill, which would establish a cap and trade program to mitigate climate change, and is slated for consideration in the Senate this session.

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