Nathanial Gronewold, ClimateWire reporter

NEW YORK — Pessimism is beginning to creep its way into the hearts and minds of players in the U.S. carbon market as credit generators and traders take a closer look at the political climate for climate change legislation in Washington.

While almost everyone still expects the federal government to eventually develop a nationwide carbon emissions cap-and-trade system that covers most of the economy, greater uncertainty is building about what that eventual scheme will look like and how effective it will be. While the industry had anticipated 2012 as the start date for federal cap-and-trade, most now see that timeline as unrealistic.

“We’re really uncertain what’s going to replace Lieberman-Warner,” Lou Pai, managing director of Element Markets, told his industry cohorts at a gathering here Wednesday. “We don’t know what will happen in a new regime. … It’s very much up in the air.”

Lai and others now believe that a compliance carbon market can only come online in the United States by 2013 at the earliest, with 2014 and even 2015 as new probable dates the industry is considering. The international Kyoto Protocol agreement expires at the end of 2012, and nations are busy negotiating its successor.

Given the difficulty markets are having with recovering from the fallout of the housing market bust and the credit crunch, Wall Street has high hopes for carbon. Experts see a market for carbon dioxide allowances and emission reduction credits eventually developing into the world’s largest commodities exchange, rivaling oil trading. Estimates suggest that the size of a U.S. allowance market could be triple that of the European Union’s Emission Trading Scheme (ETS). The potential for investment banks, brokerages and exchanges is huge.