NEW YORK (AP) – Democrat Barack Obama endorsed the use of a carbon auction to reduce air pollution, one of several ideas offered by presidential candidates at a forum on global warming.

All the major Democratic contenders participated in the “virtual” town hall meeting sponsored by the activist group MoveOn. The forum was held in conjunction with Saturday’s Live Earth concerts, organized by former Vice President Al Gore to draw attention to climate change.

The candidates took questions from MoveOn members about how they would combat global warming, and their recorded answers were sent to 1,300 MoveOn-sponsored house parties across the country to be viewed after the Live Earth shows. Members were asked to go online after listening to the candidates and cast their vote for the best plan.

The Democrats offered conflicting views on the so-called cap and trade system used by European countries to control emissions. Environmental regulators set caps on how much pollution a power plant or other business can emit into the atmosphere. Those that exceed the cap must buy or trade for additional capacity, generally from plants that have taken steps to reduce their emissions and have extra capacity.

Obama, an Illinois senator, said that system was flawed because polluters were granted emission permits for free. He advocated an auction system, where businesses would have to pay for the right to pollute; money raised through the auction would fund research and development on alternative energy.

“We’re getting the … investment in creating a market for clean technologies,” Obama said of a carbon auction. “But we’re also generating billions of dollars we can devote each and every year to a Manhattan Project on clean energy.”

Hillary Rodham Clinton said she was “intrigued” by the carbon auction system but stopped short of endorsing it. She called global warming a “moral and ethical” issue and urged U.S. leadership on the issue.

Chris Dodd promoted his plan to tax polluters for their carbon emissions, a proposal that has drawn praise from many environmentalists. Such a tax would bring in $50 billion to be invested in clean technologies, he said.

AP-ES-07-06-07 2204EDT