WASHINGTON - September 22 - The carbon trading system that would be created by the energy bill that passed the House of Representatives in June would be complex, volatile and prone to gaming. That’s the conclusion of a new report released today by Friends of the Earth.

The report, “Simpler, Smaller and More Stable: Designing carbon markets for environmental and financial integrity,” also finds that emerging proposals to regulate derivatives are necessary but not sufficient to ensure the integrity of carbon markets. Instead, the report concludes, if policymakers wish to use a cap-and-trade system as a tool to reduce global warming pollution, they must design the system to be much simpler, smaller, and more stable than current proposals.

“The byzantine carbon trading system that came from the House, and may now be included in the Senate bill, looks nothing like your textbook emissions trading scheme. It’s complex and has unique characteristics that demand attention,” said Michelle Chan of Friends of the Earth, the report’s author.  “Fortunately, such a system has not yet been put in place. There’s still time to do this right. Simpler is better; the more that bells and whistles are included, the more chances there are to game the system.”

The report suggests carbon trading could be made more straightforward by only allowing the trading of emissions permits (and excluding carbon offset credits) and by discouraging Wall Street speculators from dominating carbon markets.

The full report can be found at: http://www.foe.org/sites/default/files/CarbonMarketsReport.pdf