Will financial firms--the likes of Goldman Sachs and Morgan Stanley--inevitably come to dominate any market for carbon emissions? A lot of people in Congress seem to be weighing the argument seriously. The Economist notes the words of one Senator: "It won't be very long before we have derivatives, we'll have swaps, we'll have synthetic swaps, you name it, we'll have all of them and it'll be a field day for speculation."

A few seem to be in favor of placing restrictions on the biggest firms from trading in these markets. Getting this right will be hard. It's understandable for people to worry about the excesses of rampant speculation. At the same time, there are legitimate hedging needs out in the economy. Some speculation is a by product. We'll see how this ends up. 

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