RALEIGH - Private investors alone can't spur an environmentally friendly "green economy," Bank of America chief executive Ken Lewis said Tuesday, as he called on Congress to create a cap-and-trade system to help control carbon emissions.

Such a cap-and-trade system would allow businesses to buy and sell emissions credits -- selling extra allowances if they come in under a carbon emission quota and buying them if exceed the cap. It was one of several suggestions Lewis made to policymakers in a speech at the Institute for Emerging Issues forum, held at N.C. State University.

"We favor a market-based mechanism to set a value for carbon allowances, and a clear, federal standard that would give investors the certainty they need to plan for the future," Lewis said.

The two-day conference, attended by General Electric chairman and chief executive Jeff Immelt and Duke Energy CEO Jim Rogers, among others, focused on the development of alternative fuels and conservation efforts that will create jobs and reduce the pollution blamed for global warming.

"Like any large, important, transformative project, this one is going to require a lot of money," Lewis said. "I'm guessing that's why you invited me."

Along with the cap-and-trade system, Lewis said policymakers must determine what kind of environmental incentives and regulations work best at the state level, which would help avoid a patchwork of inconsistent regulation. The private capital market also needs "a stable and predictable regulatory environment with a bias toward clean energy and the green economy," he said.

"When innovators and financial backers are confident of government support, risk calculations change, and good things happen," he said.

The European Union established the first trading system under the Kyoto Protocol, the emissions-reduction agreement rejected by the U.S., and Lewis said that Europeans are "way ahead of us in developing these markets."

Last week, a three-judge federal appeals court panel struck down such a trading system for mercury, which is not a greenhouse gas. Environmentalists and about a dozen states opposed the system, imposed three years ago by the Environmental Protection Agency, saying it would endanger people who live near power plants that buy the right to pollute.

Lewis also said Tuesday that the bank planned to start assessing the cost of carbon in its risk and underwriting processes. Without federal legislation setting that cost, Lewis told the crowd of business and government leaders Bank of America puts it at $20 to $40 per ton of carbon dioxide.

In March, Bank of America launched a $20 billion initiative to help its customers support the growth of environmentally friendly activities and to reduce global warming.

On Tuesday, he said Bank of America had created a team whose sole focus will be to identify and finance projects that support a green economy and address the nation's environmental challenges.

"There are a lot of great ideas out there," Lewis said. "This fact creates a huge risk management challenge for banks. ... As a financial backer of new technologies, the bank is in the position of picking winners and losers."