US’ Only National Carbon Market Shutting Down at the End of 2010

Seven years after opening, North America’s only national market trading all six greenhouse gases will close its doors at the end of this year.

The Chicago Climate Exchange (CCX), a voluntary but legally binding system where members commit to annual greenhouse gas emission reduction targets will not be able to function in the absence of federally-enacted cap-and-trade, reports The Financial Times.

Atlanta-based Intercontinental Exchange, which purchased CCX in April, reportedly will keep the separate Chicago Climate Futures Exchange, a clearinghouse for carbon offsets and credits, open until at least the end of 2012, when the carbon credits provision of the Kyoto Protocol is set to expire.

“The bulk of the users have said to us that they really don’t want to continue to trade voluntarily in the absence of any credit for their work by the current administration,” said Jeff Sprecher, chief executive of IntercontinentalExchange.

IntercontinentalExchange purchased CCX, the Chicago Climate Futures Exchange and the European Climate Exchange in April for about $634.5 million

Sprecher said he remains bullish on emissions trading in Europe, where the European Climate Exchange is profitable, but he’s far less enthusiastic about carbon trading on a national scale in the U.S., where any discussion of a national cap-and-trade these days is a non-starter, especially with big Republican wins in last week’s midterm elections.

While the only national carbon market in the U.S. will close at the end of this year, regional markets like the Regional Greenhouse Gas Initiative in the East and the Western Climate Initiative in the West and Canada may still have a chance at thriving. Because they do not require buy-in from all fifty states, and because the politics of energy in the U.S. usually break down along regional divisions, as opposed to partisan ones, there may be more cohesion in smaller markets rather than a single national one.

Since launching in 2003 CCX has grown to 450 members, attracting a diverse array of companies in both size and business sector to trade emissions of carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, perfluorocarbons and hydrofluorocarbons.

Article by Timothy B. Hurst, appearing courtesy Earth & Industry.

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