Cap and trade, a market-based approach to limit greenhouse gas emissions, may have taken its last gasp. Republican victories in Congress have changed the political landscape.

Last year, the U.S. House passed a climate bill that would have set a national 2020 emissions reduction target on greenhouse gas emissions, and it outlined a national emissions trading scheme.

Senate Democrats slimmed down the bill in July, abandoning the cap-and-trade method of cutting emissions. Yet the idea remained a priority for many lawmakers and the administration.

After the election, however, President Obama distanced himself from the controversial legislative proposal, saying “Cap and trade was just one way of skinning the cat,” referring to addressing carbon emissions, which environmentalists claim contribute to global warming.

Another way for the administration to try to curb carbon emissions is through regulation. The federal Environment Protection Agency (EPA) is preparing to regulate greenhouse gases emitted from power generators and oil refineries.

But given the country’s changed political mood, President Obama suggested that he now prefers legislation to regulation.

These developments leave Connecticut and other members of the Regional Greenhouse Gas Initiative (RGGI)—a regional cap and trade compact among most of the Northeastern states—uncertain about what the future holds.

According to news accounts, the only national carbon trading market in the U.S. will close its doors next month, due to stalled legislation in Congress and GOP gains in the midterm elections.

Participants in the voluntary Chicago Climate Exchange say they don’t want to continue to trade voluntarily in the absence of support from Washington, D.C. -- Kevin Hennessy

Kevin Hennessy is a CBIA assistant counsel. He may be reached at 860.244.1979 or kevin.hennessy@cbia.com.