Last week, the U.S. Environmental Protection Agency proposed “a comprehensive system for reporting emissions of carbon dioxide and other greenhouse gases produced by major sources in the United States.” The proposed requirements system would cover suppliers of fossil fuel and industrial chemicals, car and engine manufacturers, and other organizations that emit more than 25,000 tons of greenhouse gases annually. The first report would be due to the EPA in 2011 for calendar year 2010, although automakers would begin reporting for the 2011 model year.

The likelihood that this proposal or a similar one will become part of the regulatory framework is “very close to inevitable,” says Michael Meehan, chief executive officer with Carbonetworks, a provider of emissions management software. “The clock is now officially ticking for U.S. businesses.”

Essentially, the EPA is using the Clean Air Act to make carbon a “registered pollutant” that companies need to track, Meehan says. As a result, the proposal wouldn’t need Congressional approval. Instead, the change would be an addendum to the act.

The requirement also is a first step toward some sort of carbon trading market. That could mean a “cap-and-trade” market, in which each firm is allowed some number of tons of carbon that it can generate. A company that exceeds that number would need to either buy additional allowances or invest in clean energy projects to offset the carbon it is generating.

Or, the government could simply tax carbon emissions. It’s a politically unpopular option, of course, and offers no guarantees that companies will actually reduce their emissions. However, it’s simpler to administer and gives companies a better idea of their ultimate costs. In contrast, a cap-and-trade system exacerbates price volatility, says John Kemp, a Reuters columnist.

Few financial executives are going to welcome the work and expense required to report greenhouse gas emissions. To make it a bit more palatable, President Obama has proposed using about $15 billion of the money raised each year to fund other green jobs. From an economic point of view, it makes sense to raise the cost of those things — such as greenhouse gases and other pollutants — that can have a negative impact on society overall.

CFOs and treasurers with organizations likely to be affected by the proposed regulation, or those who simply have a strong opinion on the subject, can comment on the proposal for 60 days after it first appears in the Federal Register. ###