The CER market has received a boost with the decision by US lawmakers to amend the most-likely US global warming legislation to allow the use of international carbon offsets by US emitters under its proposed emissions trading scheme. The move may also help bring the US closer to China and India in their stand off over obligations under a future global climate treaty to follow the Kyoto Protocol. The bipartisan Lieberman-Warner Bill, the Climate Security Act, is supported by Republican presumptive nominee John McCain who was one of its early sponsors. The bill would mandate targets to cut greenhouse gas emissions by 70 per cent below current levels by 2050, 20 per cent by 2020, and establish a national emissions cap-and-trade scheme to achieve those goals. It is due to go to the floor of the US Senate in ten days time.

Both Democrat candidates support cap and trade and even tougher targets, but the Lieberman-Warner bill is the best placed to make it through Congress having already garnered some degree of cross-party support. The bill was first proposed some years ago and has been through many manifestations on its long passage to Congress. This week it was amended significantly again to allow, among other changes, US emitters to meet up to 5 per cent of their emissions limit by buying foreign carbon offset credits that meet UN standards, Bloomberg reports. This puts CERs at the head of the pack - carbon credits generated in developing countries under the UN Clean Development Mechanism (CDM), which grew to a $13 billion market in 2007. The change recognises that wider access to offset credits would lower the cost of complying with emissions laws for US companies. If the bill becomes law, this amendment could create a massive boost for the CDM and CER market, creating a significant increase in demand up to 2020.

With the US responsible for a quarter of the world's greenhouse emissions, 7 billion tonnes annually, even 5 per cent of the 90 per cent covered under an emissions trading scheme could see demand of up to 300 million CERs a year in the US alone. But CER suppliers would also have to meet US EPA standards and compete with local US offsets which emitters would be allowed to use in bigger proportions. Future CER demand has been under a cloud since January when European Commission proposed there be no new allowance for the use of CERs in the EU emissions trading scheme after 2013. Europe is currently the major source of demand for CERs. The US underpinning the CDM market in this way may also help international climate negotiations, currently stalled over how the burden of emissions reduction should be shared between rich nations like the US and poorer nations like China and India. A key CDM aim is to bring investment in clean technology to the developing world, welcomed by such countries.