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Carbon Cap-and-Trade Wraps Up on CCX

The Chicago Climate Exchange no longer trades carbon financial instruments (CFI), and is transitioning entirely to exchanges of carbon offsets. The decision was announced in October 2010 by CCX parent company Intercontinental Exchange, an electronic futures and derivatives platform based in Atlanta and London, according to the New York Times.

The 450 members of the CCX achieved reductions of 700 million tons of greenhouse gas emissions over the seven years that the cap-and-trade program existed. 88 percent of the reductions came through direct industrial emission cuts, and 12 percent came through offsetting. Its final estimated average price for the CFI throughout the term comes to $3.26 per metric ton, about comparable to other voluntary offsets credits sold in the United States, said the Times.

When comprehensive cap-and-trade legislation failed in the US Senate, interest dwindled and the price of its carbon credits crashed, and participants in the voluntary exchange lost interest, according to earlier reports from the New York Times.

The cap-and-trade system functioned by first enlisting companies to agree to limit their emissions and then requiring them to buy credits if they exceeded their limits. Within an offsets registry, companies that are investing in different types of emission-reduction programs can sign up to receive credits for their efforts. Those credits then can be used on environmental compliance programs that other private or public entities set up, according to the Securities Technology Monitor.

Intercontinental Exchange (ICE) acquired the Climate Exchange, which includes the CCX, the EU’s European Climate Exchange (ECX), and the Chicago Climate Futures Exchange (CCFE), for about $600 million in July 2010.

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