Obama gives up on cap-and-trade to curb climate change

Feb 14, 2011, 23:38 GMT

Washington - US President Barack Obama has officially given up hope of enacting a cap-and-trade plan to limit the emissions of greenhouse gases that are blamed for global warming.

The system that would have made companies pay for climate-changing pollution was not included in Obama's 2012 federal budget proposals presented on Monday to Congress. Cap-and-trade had been a part of previous budget proposals but never passed Congress while Obama's own party still held large majorities in 2009-10.

Obama's budget proposal also includes modest cuts to the country's top environmental regulator, the Environmental Protection Agency (EPA), which has been tasked with finding ways to regulate greenhouse gases this year in the absence of congressional legislation.

The Department of Energy will see its budget increase slightly to nearly 30 billion dollars, as Obama has sought to provide greater incentives for renewable energy alternatives. The budget also includes a request to end government subsidies for oil companies.

Cap-and-trade was once the centrepiece of Obama's climate policies but ran into massive opposition in Congress from conservatives and some lawmakers from his own Democratic Party, who viewed the measure as overly harmful to the US economy.

Emissions trading is used in Europe to limit pollution and is being considered in a number of other countries. Under the system, the government would set an overall limit on pollution levels and allocate permits that can be traded between cleaner and dirtier companies.

Despite the setback, Obama has insisted that his administration has not given up on a pledge made internationally to reduce greenhouse gases to 17 per cent below 2005 levels by 2020.