**GAO-10-851R**                      Published: Aug 19, 2010. Publicly Released: Sep 20, 2010.                  

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## Highlights

This letter is our response to a congressional request concerning carbon trading in the United States and various design and implementation issues to be considered in discussions about a possible national carbon trading program. Industrial activities in the United States emit significant amounts of carbon dioxide and other greenhouse gases each year, substantially affecting the earth's climate, according to the National Academy of Sciences. In an effort to reduce these emissions, some have suggested capping emissions and allowing them to be traded in secondary markets just as other commodities are traded. We briefed congressional committee staff on the results of our work on July 23, 2010. Specifically, we provided information on (1) carbon-related products currently traded in the United States and the extent of trading; (2) risks and challenges posed by these products; (3) the extent to which and how these products are regulated; and (4) issues that market observers identified for policymaker consideration as part of creating a national cap-and-trade carbon market.

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## Recommendations for Executive Action

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## Office of Public Affairs

Sarah Kaczmarek
kaczmareks@gao.gov

(202) 512-4800

## Topics

Financial Markets and Institutions

AllowancesClimateCommodities exchangesCommodity futuresCommodity marketingEmissions tradingFederal regulationsFraudInternal controlsPrices and pricingProduct safetyRegulationTrade regulationRisk factors