According to a Wall Street Journal article three major investment banks, Citigroup, JP Morgan Chase, and Morgan Stanley collectively decided that it is likely that the US would adopt some form of carbon regulation in the near future. In order to protect themselves from the fallout of these new regulations, they are going to make it harder for coal fired power plants to get funding from them. They would choose to fund energy effieciency plans and renewable energy projects over traditional projects. And before any project receives funding they must prove that they could be "economically viable even under potentially stringent federal caps on carbon dioxide". The banks claim that their major motivation is financial but that they have also been under pressure from environmental groups, two of which helped design these new standards for funding. This is great! People are starting to think ahead in a big way!
The new funding standards include building into the financial plan the costs for carbon allowances or carbon removal. There is quite a bit of dispute right now about whether power plants should pay for allowances or get them for free (or a little of both) and how should the distribution be decided. It seems to me that this is something that no one can get right. Allowances were over-allocated in Europe which is causing trouble with the European carbon market. The same thing happened with the California RECLAIM trading market a couple years back. Hopefully we will learn from the mistakes of the past. But total allocations is not the only problem. The distribution is also difficult. Should relative allocations be decided using historical emissions (bad idea in my opinion) or total production (sometimes difficult to compare different processes or equipment although the better choice in my opinion). How quickly should the cap be reduced? These are questions that haven't been correctly answered yet. Am I leaving anything out?