Chicago Climate Exchange Sold, Uncertainties Mount
photo via flickr
Uncertainties surround carbon pricing and trading in the U.S. No one knows if Congress will get their act together this year to pass a bill that finally puts a price on carbon and questions remain about what, if anything, will come out of Cancun later this year when the United Nations Framework Convention on Climate Change meets to hopefully finish the business they could not complete in Copenhagen last year. The effects of the uncertainty was on display Friday when the founders of the Chicago Climate Exchange sold their interests to a European trading firm. The Intercontinental Exchange (ICE), an electronic futures and derivatives trading company based in Atlanta and London, bought the Chicago Exchange and two other trading outposts for $600 million dollars. About 90 percent of carbon traded in Europe goes through the European Climate Exchange under rules set up by European Union's Emission Trading System.
The Chicago Exchange handles only carbon credits of the voluntary variety, meaning that companies are choosing to participate in the program as opposed to being mandated by the government. Thirteen companies, including American Electric Power, DuPont and Ford, began trading voluntary credits in 2003 and they all agreed to reduce their emissions 6 percent by the end of 2010. Prices for the credits are valued now at just 10 cents per metric ton of carbon dioxide.
Problems around the pricing include the veracity of the offsets credits, regulatory uncertainty, and the public's wavering support for climate action.
Hopes for a more substantive price on carbon were at their highest in 2009 when President Obama came into office. Obama campaigned on passing a climate bill that would set up a mandatory emissions trading program, but he has not prioritized his promise and now hopes of passing a bill this year are fading away as legislators squabble over what will come next after the health care bill and financial reform.
Without a federal law, states will continue to move forward. The Northeast already has an emissions trading program, RGGI, and California is working out the rules of its system now.