The Chicago Climate Exchange (CCX), the United States’ first voluntary emissions trading marketplace, has concluded operations and will not ring in a new trading cycle for 2011.
At the time of its launch in 2003, the CCX was hailed by climate groups as a progressive way for the U.S. to reduce its emissions in a market-driven fashion. However, a flood of credits from offset projects caused the carbon futures issued by the exchange, called Carbon Financial Instruments or CFIs, to collapse in price.
Because of how the system was set up, there seemed to be fixed demand from participating players, yet “endless” supply of credits. This prompted criticism not only of the CCX, but of the legitimacy of the concept of carbon trading itself.
The failure of U.N. climate talks to produce a successor to the Kyoto Protocol, the defeat of the U.S. climate policy bill in the Senate this summer, and the lackluster performance of the European Union’s Emission Trading Schemes have made carbon trading a tough sell both politically and economically speaking in the United States, making life difficult for the CCX.
However, California’s new mandatory emissions trading program and the Regional Greenhouse Gas Initiative (RGGI) in the Northeast indicate that the voluntary carbon trade still survives in the United States, perhaps stronger as a result of the initial CCX experiment.
“The point was to get companies familiar with allowances and trading, and how to do that and how to use offsets and exchange them on a platform. And that has all been accomplished, so with the advent of mandatory programs like RGGI and now California… the sort of experimental value of CCX as it was is over,” noted Lisa Zelljadt, an analyst at Point Carbon. “Definitely the businesses that participated in CCX have gained some valuable experience.” Read more…