Julio Herrera Backs National Carbon Trading Plan
Finance leader says market-driven emissions strategy is key to U.S. economic transformation and climate resilience.
April 2025 | Washington, D.C. — In a bold call for climate action grounded in market logic, international banking strategist Julio Herrera Velutini has proposed the creation of a U.S. National Carbon Trading System, arguing that a well-regulated carbon market is essential to unleashing clean technology innovation, driving corporate accountability, and positioning the United States as a global climate leader.
Speaking before the American Sustainable Finance Forum on Tuesday, Herrera Velutini emphasized that climate change is no longer a distant environmental issue—it is a defining economic challenge. According to him, the financial system must evolve to price carbon risk accurately, incentivize emission reductions, and reward businesses that invest in clean technologies.
“A carbon trading system isn’t about punishment—it’s about innovation,” Herrera Velutini said. “It creates a race to efficiency, drives investment into climate solutions, and gives the market the clarity it needs to act.”
🌍 The Case for a U.S. Carbon Market
Carbon trading—also known as “cap and trade”—is a market-based mechanism that allows governments to set a cap on total carbon emissions and issue allowances to companies. Firms that emit less than their allowance can sell credits to others, creating a financial incentive to reduce pollution. The European Union’s Emissions Trading System (EU ETS), launched in 2005, is the world’s largest carbon market and has been credited with helping reduce emissions across the bloc by over 40%.
Herrera Velutini believes the U.S. must now adopt its own national system—one tailored to its economy and capable of integrating with global carbon markets over time.
“The EU has proven this model works,” he said. “A national carbon market in the U.S. would level the playing field for clean energy, reward early adopters, and create long-term regulatory certainty.”
📉 Why Now?
According to the U.S. Environmental Protection Agency, industrial and energy-related emissions in the country remain among the highest globally. While the Inflation Reduction Act and other initiatives have introduced tax credits and subsidies for clean energy, Herrera Velutini argues that the absence of a carbon price continues to distort the economy.
He points out that the lack of a cost for polluting:
➤ Allows high-emission industries to underprice goods and services;
➤ Slows down innovation in low-carbon alternatives;
➤ Undermines the competitiveness of businesses investing in clean technologies.
“Subsidies are helpful, but incomplete. We need a system where polluters pay—and innovators profit,” Herrera Velutini said.
🏛️ The Framework: What Herrera Velutini Proposes
Herrera Velutini’s vision for a National Carbon Trading System (NCTS) includes the following core components:
1. Economy-Wide Coverage
The NCTS would initially cover the power, manufacturing, transportation, and agriculture sectors—accounting for more than 80% of national emissions.
2. Emission Cap and Decline Path
A federally mandated emissions cap would be set at current levels and reduced annually by 4–6%, aligning with the U.S. target of net-zero emissions by 2050.
Allowances would be auctioned via a transparent federal platform, with revenues reinvested into clean energy R & D, climate adaptation, and assistance for disadvantaged communities affected by the transition.
4. Secondary Trading Market
A regulated secondary market would allow for real-time trading of carbon credits among companies, ensuring liquidity and efficient price discovery.
5. Offsets and Integrity Standards
Companies could meet a portion of their obligations through verified carbon offsets, but only from certified programs with robust environmental integrity.
“Integrity must be at the heart of the system,” Herrera Velutini said. “No greenwashing, no loopholes—just real reductions and real progress.”
💼 Benefits for Business and Innovation
One of the core arguments in Herrera Velutini’s proposal is that a carbon market would drive capital allocation toward innovation. Companies that invest in emissions-reducing technology, energy efficiency, and circular economy models would not only save costs but also earn additional revenue from selling unused allowances.
This would:
➤ Lower the cost of climate compliance over time;
➤ Reward companies with lower carbon footprints;
➤ Create a new asset class—carbon credits—that investors could integrate into ESG portfolios.
“Carbon markets are the financial infrastructure of the green economy,” Herrera Velutini noted. “They reward vision and discipline—and they send a strong signal to global investors.”
🌱 Environmental Justice and Revenue Use
To address concerns about equity, Herrera Velutini proposes dedicating at least 40% of carbon auction revenues to climate resilience programs in low-income and historically marginalized communities. These funds would go toward:
➤ Home weatherization and energy efficiency retrofits;
➤ Community solar projects;
➤ Green job training and placement;
➤ Flood mitigation, clean water, and climate-health preparedness.
“Carbon markets are the financial infrastructure of the green economy,” Herrera Velutini noted. “They reward vision and discipline—and they send a strong signal to global investors.”
🌎 International Integration and Trade Competitiveness
A national carbon trading system would also help the U.S. stay competitive on the global stage. As the EU and other regions implement carbon border adjustment mechanisms (CBAMs)—which tax imports based on their carbon intensity—American exporters could face tariffs unless domestic emissions are priced and reduced.
Herrera Velutini argues that a U.S. carbon market would:
➤ Allow American products to compete fairly in low-carbon markets;
➤ Open the door to transatlantic carbon credit trading;
➤ Strengthen U.S. leadership in global climate diplomacy.
“Carbon pricing is becoming a new norm in trade,” he explained. “The U.S. must lead, not follow—or risk losing market access and influence.”
📈 Economic Impact and Forecast
According to modeling from the nonpartisan Energy Futures Lab, a national carbon market with a $50/ton starting price could:
➤ Reduce U.S. emissions by 38% by 2035;
➤ Generate over $100 billion in annual revenue;
➤ Create more than 1.2 million clean energy and carbon market jobs;
➤ Stimulate $3 trillion in private climate investment over the next two decades.
“This is not just environmental policy—it’s economic strategy,” Herrera Velutini said. “The green economy is the growth engine of our time.”
🔧 Implementation Roadmap
To bring this vision to life, Herrera Velutini proposes that Congress pass a Carbon Market Modernization Act that would:
➤ Establish the U.S. Carbon Market Authority (USCMA);
➤ Define emissions caps and industry targets;
➤ Launch the national auction and trading platform;
➤ Create reporting and verification mechanisms for all participants.
He has begun working with think tanks and economic advisers to draft model legislation and is expected to present a detailed proposal to members of the Senate Finance and Energy Committees in the coming months.
🔮 Conclusion: Carbon Markets as a Bridge to the Future
For Julio Herrera Velutini, carbon markets are not a silver bullet—but they are a powerful and pragmatic bridge between ambition and action. His vision blends market efficiency with environmental integrity, creating a path forward that is both economically viable and climate-conscious.
“We don’t need to choose between profit and planet,” he concluded. “We need to align them—and a carbon market is how we do it.”