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©2008 CHICAGO CLIMATE EXCHANGE, INC.
Michael J. Walsh, Ph.D.Executive Vice President, ResearchChicago Climate Exchange®, Inc.
Reproduction or quotation is expressly forbidden without consent of the author.
Implementation of Market-based Solutions to Climate Change
©2008 CHICAGO CLIMATE EXCHANGE, INC.
“Business Increases pressure on G8 to set up global emissions trading system”
“Steve Lennon, chair of the environment and energy commission of the International Chamber of Commerce, which represents hundreds of
thousands of companies in 130 countries, said:
“We see a global system of emissions trading as inevitable”
Financial Times, June 10, 2005, page 1
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Global Status of Legislated Carbon Market Activity
European UnionAustralia Canada
21%
US RussiaUkraine Japan
36%
Rest of World43%
Green = live market or final planning stages
Yellow = signs of progress
Red = market activity limited to CDM
percentage share of global emissions
©2008 CHICAGO CLIMATE EXCHANGE, INC.
The Growing CCX Global Platform
Chicago Climate Exchange (CCX) Launched 2003 with 14 members, now 400+ members (US, CA, MX, BR, NZ, AU, CH)
European Climate Exchange (ECX)FSA-regulated futures market for European CO2 AllowancesLaunched April, 2005 – accounts for 80-90% of total exchange traded volume in the EU ETS
Chicago Climate Futures Exchange (CCFE)CFTC-regulated futures exchange for U.S. SO2 and NOx allowancesLaunched in December 2004, world’s first environmental derivatives exchange
Montreal Climate Exchange (MCeX)Joint venture with the Montreal BourseHosts Canadian GHG trading, other environmental markets: launched May 30, 2008
New York Climate Exchange™ and Northeast Climate Exchange™ Developing instruments for northeast Regional Greenhouse Gas Initiative (RGGI)
India Climate Exchange(In development)
©2008 CHICAGO CLIMATE EXCHANGE, INC.
• Arthur Pigou (early 1900s): • environmental damages due to wrong prices• tax harmful actions, subsidize positive ones
• Ronald Coase (1960s)• ill-defined property rights preclude fair settlements• ownership, low transaction costs => negotiate, settle
• Joseph Schumpeter (early 1900s): • inventive process: invention, innovation, replication
Climate Policy, Economic Thought
©2008 CHICAGO CLIMATE EXCHANGE, INC.
• Flexibility: lower cost to cut emissions compared to inflexible mandates
• Wise use of scarce resources: static efficiency• more environmental protection per dollar spent
• Lower cost makes larger cuts politically acceptable
• Works with/harnesses business capabilities: another asset and materials flow to be managed
• Price signal guides resources, indicates real cost
• Profits stimulate innovation: dynamic efficiency
Emissions Trading: Rationale
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Example: Economic Benefits of Emissions Trading - Total Cost to Society to Cut Emissions 2 Tons is Lowered Through Trading
$0
$100
$200
$300
$400
Plant A Plant B NoTrading
Trading
cost per ton of
reductions$100 per ton
$225 per ton
Each plant cuts 1 ton,
total cost = $325
Plant A cuts 2 tons (sells one ton of credit to Plant B),
Plant B “hires” A (by purchasing one ton),
total cost= 2 x $100 = $200$225(Plant B)
$100(Plant A)
$100
industry pollution control
cost structure
$100
Same overall emission cuts realized (2 tons),
cost to society is reduced through trading
©2008 CHICAGO CLIMATE EXCHANGE, INC.
• Multiple emission sources cause common problem (mixing)
• Able to define and monitor reduction objective
• Differences in mitigation costs across sources allow cost savings through trading:• those facing low cost to cut emissions make extra cuts and sell allowances to those facing high cost
• Enforce rules while maintaining other protections (e.g. local air rules)
• Functional legal/business environment:• effective governance, enforceability• rules stability and confidence therein• reliability of contracts and commerce
Emissions Trading: Needed Conditions
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Emissions Trading: Basics
Example: Baseline, Target and Actual Emission Levels
0
20
40
60
80
100
120
Baseline Seller Buyer
Em
issi
on
Le
ve
ls
Emission target: 95 tons (5% cut)
100 ton baseline
85 tons
105 tons
10 ton surplus
10 ton shortage
©2008 CHICAGO CLIMATE EXCHANGE, INC.
• Set targets: overall and source-specific limits• based on environmental goals, affordability
• Assign tradable allowances to sources (=target)
• Define eligible offset projects, issue credits
• Monitor and report emissions, track transfers• emissions database• allowance registry
• Periodic “true-up”: retire allowances in amount equal to emissions• annual true-up for “accumulative” pollutants (e.g. SO2, CO2) • seasonal true-up for time-sensitive pollutants (e.g. ozone/NOx)
Emissions Trading: Implementation
©2008 CHICAGO CLIMATE EXCHANGE, INC.
U.S. Electric Power Sector SO2 Emissions
0
5,000
10,000
15,000
20,000
1980 1985 1990 1995 2000 2005 2010 2015 2020
Thou
sand
Ton
s
Projected Emissions w/ CAIR* Existing Title IV Cap*
CAIR Caps*
Source: USEPA
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Impact of trading on SO2 pollution
Based on EPA’s latest air quality trends data the national composite average of SO2 annual mean ambient
concentrations decreased 48 percent between 1990 and 2005.
Annual Mean Ambient SO2 Concentration1989-1991 2004-2006
12
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Pre-1992 Forecasts of SO2 Allowance Prices vs. Actual Allowance Prices
$0
$500
$1,000
$1,500
$2,000
$2,500
1 11
Pri
ce p
er t
on
"Phase 1 Middle" prices, Source: Hahn and May, The Electricity Journal, March 1994
$981 United Mine Workers$785 Ohio Coal Office
$688 Electric Power Research Institute$446 Sierra Club $392 American Electric Power
$309 Resource Data Intl.
$275 - average auction price, 1993-2008
$1500 EPA Emergency Supply
$2000 Fine Level
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Schoolchildren buy and retire SO2 allowances: low transaction costs allow efficient
outcomes
Chicago Board of Trade, March 1994 (Photo Source: Mainichi Evening Eye)
©2008 CHICAGO CLIMATE EXCHANGE, INC.
• Multiple environmental and economic successes
• U.S. SO2 market: • 100% compliance• emissions fell ahead of schedule• active trade, low cost to consumer
• Other successes: gasoline lead; L.A.; U.S. NOX
• International carbon markets:• CCX, EU ETS markets now live• Australia, NZ, Canada, Japan markets planned• U.S. market proposed in numerous legislative drafts
Emissions Trading In Practice
©2008 CHICAGO CLIMATE EXCHANGE, INC.
• Atmospheric concentrations of carbon dioxide and other greenhouse gases are up – no dispute
•Atmospheric concentrations of carbon dioxide an other greenhouse gases are up – no dispute
• Risk: global temperature rise, more extreme heat waves, drought and precipitation events: stress on water, energy, infrastructure
• Risk: Sea-level rise: thermal expansion, land-ice melt • coastal damage• inundation
• Risk: Spread of temperate disease, pests• human health• agricultural, forestry
• Risk: bad policy could yield less environmental progress for any given investment in resources: how to optimize return on investment?
Global Climate Risks
©2008 CHICAGO CLIMATE EXCHANGE, INC.
• Lower carbon fuel: natural gas, CO2 neutral fuel (biomass)
• More efficient fuel use: MPG, lighting, insulation
• Methane capture/combustion
• Abatement devices, alternative chemicals
• Carbon sequestration:• reforestation, carbon accumulation, preservation• agricultural soils• geologic
How to Reduce Greenhouse Gases
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Getting Started With A Pilot Market: A Concept Becomes Reality, Yet Still No Implementation by Western Hemisphere Governments
©2008 CHICAGO CLIMATE EXCHANGE, INC.
What is Chicago Climate Exchange?
Chicago Climate Exchange (CCX®) is the
world’s first and North America’s only voluntary,
legally binding greenhouse gas reduction, audit,
registration and trading program for emission
sources and offset projects in North America,
Brazil and globally.
©2008 CHICAGO CLIMATE EXCHANGE, INC.
CCX Market Architecture (2003-2010)
Phase I: Members made legally binding commitments to reduce or trade 1% per year from 2003-2006, for a total of 4% below baseline.Phase II: Members make a legally binding commitment to reduce to 6% below baseline by 2010.Baseline = Avg. emissions from 1998-2001, emissions in 2000 (Phase II)
CCX is synergistic with and complementary to all emerging policy, precludes none – whetherstate, regional, national, voluntary or mandatory.
©2008 CHICAGO CLIMATE EXCHANGE, INC.
GHG Reduction Targets: CCX, Proposed Legislation
70
80
90
100
110
120
130
2000 2005 2010 2015 2020 2025 2030
Year
Em
issi
on
targ
ets
rela
tive
to y
ear
2000
leve
ls
trend
CCX "B"([email protected]%/y)
proposedLieberman-Warner
proposedFeinstein-Carper
proposedCalifornia
proposedBingaman- Specter
Federal/Cal Proposals “catch-up” to CCX path around 2020-2030
CCX ongoing and extended paths
Trend = +1%/yr
©2008 CHICAGO CLIMATE EXCHANGE, INC.
CCX Membership(Over 400 - All Sectors)
*Application in process
Electric Power AGL Hydro PartnershipAllegheny Energy Inc.Alliant EnergyAmerican Electric PowerAmerican Municipal Power-OhioAssociated Electric Cooperative Avista CorporationCentral Vermont Public ServiceDTE Energy IncDuquesne Light CompanyGreen Mountain PowerHoosier Energy Rural ElectricManitoba HydroNRG Power Marketing Inc.Puget Sound Energy, Inc.Reliant Energy Services Inc.TECO Energy, Inc.
ElectronicsMotorola, Inc.Sony Electronics Inc.Square D/Schneider Electric
Aerospace & EquipmentRolls-RoyceUnited Technologies
Agricultural ProductsAgrium U.S. Inc.Cargill, IncorporatedMonsanto Company
AutomotiveFord Motor Company
Beverage ManufacturingNew Belgium Brewing
ChemicalsDow CorningDuPontRhodia Energy Brasil Ltda
Coal MiningJim Walter Resources, Inc.PinnOak Resources LLC
Commercial InteriorsKnoll, Inc.Steelcase Inc.
Counties & StatesKing County, WashingtonMiami-Dade County, FloridaSacramento County, CaliforniaState of IllinoisState of New Mexico
Diversified ManufacturingEastman Kodak Company
Environmental ServicesAtlantic County UtilitiesLancaster County Solid WMAVeolia Environmental Services Wasatch Integrated WMAWaste Management, Inc.
©2008 CHICAGO CLIMATE EXCHANGE, INC. *Application in process
RetailSafeway, Inc.
TechnologyFreescale SemiconductorIBMIntel CorporationSTMicroelectronics
TransportationAmtrakSan Joaquin Regional Rail
UniversityUC San DiegoHadlow CollegeMichigan State UniversityUniversity of IdahoUniversity of IowaUniversity of MinnesotaUniversity of OklahomaTufts University
ManufacturingBayer CorporationInterface, Inc.Ozinga Bros., Inc. Smurfit-Stone
MunicipalitiesCity of AspenCity of BerkeleyCity of BoulderCity of ChicagoCity of FargoCity of OaklandCity of Melbourne, AustraliaCity of Portland
PetrochemicalsPetroflex Industria e Comercio
PharmaceuticalsBaxter International, Inc.RecreationAspen Skiing Company
Ethanol ProductionCorn Plus LLP
Financial InstitutionsBank of America
Food ProcessingMeister Cheese Co. LLCPremium Standard FarmsSmithfield Foods, Inc.
Forest Products Abitibi-Consolidated Aracruz Celulose S.A.Cenibra Nipo Brasiliera S.A.International PaperKlabin S.A.Masisa S.A.MeadWestvaco Corp.Neenah Paper IncorporatedStora Enso North AmericaSuzano Papel E Celulose SATembec Industries Inc.Temple-Inland Inc
CCX Membership(Over 400 - All Sectors)
©2008 CHICAGO CLIMATE EXCHANGE, INC.
540
339
237
232
206
174
171
151
130
94 86
71 60 56 45 37 33 31 30 29 22 22 19 11 9 4 3
170
496
0
100
200
300
400
500
600
CC
X
Ger
man
y
Can
ada
Pola
nd Ital
y
Uni
ted
Kin
gdom
Aus
tral
ia
Spai
n
Fran
ce
US
NE
Stat
es (R
GG
I)
Cal
iforn
ia
Cze
ch R
epub
lic
The
Net
herl
ands
Gre
ece
Belg
ium
New
Sou
th W
ales
Finl
and
Port
ugal
Aus
tria
Den
mar
k
Slov
akia
Hun
gary
Swed
en
Irel
and
Esto
nia
Lith
uani
a
Slov
enia
Latv
ia
Luxe
mbo
rg
Hun
dred
Mill
ion
Met
ric to
ns C
O2
Live Market
Market in development
Under discussion
Size of Live, Emerging, Possible GHG Markets
CCX includes more industrial emissions under its legally binding cap than any country in the world
2012 Start2003 Start
2009 Start
Included emissions
©2008 CHICAGO CLIMATE EXCHANGE, INC.
CCX Associate Members (“Carbon neutral”-selection)
Architecture/PlanningMithun, Inc.
Brokerage ServicesAmerex Energy
ConsultingDomani, LLC
Global Change AssociatesNatural Capitalism, Inc.
RenewSource Development, L.P.
Rocky Mountain Institute
Diplomatic SectorEmbassy of Denmark, Washington DC
Documentary ProductionCloverland, Inc.
Energy and Management ServicesOrion Energy Systems LtdSieben Energy Associates
Thermal Energy International
EngineeringRumsey Engineers, Inc.
Vanasse Hangen Brustlin, Inc.
Financial ServicesAccess Industries, Inc. MB Investments, LLC
Financing AgenciesOhio Air Quality Development Authority
Green Power MarketersGreen Mountain Energy Company
Information TechnologyOpen Finance LLC
Intercontinental Exchange
Legal ServicesFoley & Lardner, LLP
Sullivan & Cromwell, LLP
Non-Governmental OrganizationsAmerican Coal Ash Association
American Council on Renewable EnergyDelta Institute
Houston Advanced Research CenterMidwest Energy Efficiency Alliance
Private CollegesPresidio School of Management
Risk ManagementThe Professional Risk
Managers’International Association
Religious OrganizationsJesuit Community of Santa Clara
University
Renewable EnergyAirtricityIntergy
Reknewco, Ltd.
Retiring/OffsetsCarbonfund.orgTerrapass, Inc.
Social InvestmentKLD Research & Analytics
Pax World
TechnologyMillennium Cell
Polar Refrigerant Technology
Trade AssociationsConfederation of British Industry
©2008 CHICAGO CLIMATE EXCHANGE, INC.
CCX Participant Members (selection)
Offset AggregatorsC-Green Aggregator, LLC
Delta InstituteEnvironmental Carbon Credit Pool,
LLCEnvironmental Credit Corp.
First Capital Risk Management, LLCIowa Farm Bureau
National Carbon Offset CoalitionNorth Dakota’s Farmers Union
Offset ProvidersBeijing Shenwu Thermal Energy Trading
Hubei Sanhuan Gallo Cattle
Granger HoldingsIntrepid Technologies, Inc.
Lugar Stock FarmPrecious Woods Holdings
Sexton EnergySustainable Forestry Management, Ltd.
AGS Specialists, LLCAmerex Energy
Breakwater Trading, LLCCalyon Financial, Inc.
Cargill Power Markets, LLCEagle Market Makers, LLC
Evolution Markets, LLCEXO InvestmentsFCT Europe, Ltd.
First New York Securities, LLC.
Friedberg Mercantile Group, Ltd.
Liquidity Providers
Galtere International Master Fund, LP
GFI Securities, LLCGoldenberg, Hehmeyer & Co.
Grand Slam Trading, Inc.Grey K Environmental Fund, LP
Haley Capital ManagementICAP Energy, LLC
Kottke Associates, LLCThe League Corp.
Marquette Partners, LPNatsource, LLC
Peregrine Financial GroupRand Financial Services, Inc.
Serrino Trading Co.Shatkin Arbor, Inc.S.R. Energy, LLC
SwissRe Financial Products Corp.
TEP Trading 2 Ltd.TradeLink, LLC
Tradition Financial Services, Ltd.
TransMarket Group, LLC
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Practical and strategic drivers:
• Competitive advantages through leadership:
reduce greenhouse gas emissions in a rules-based, independently audited market system
obtain practical expertise through “hands-on” participation
build institutions: first-mover; global linkages
get ahead of disparate regulations, prepare for policy
reduce long-term mitigation costs
improve focus on energy efficiency, identify free savings
build carbon price into minds of operators and planners
trading profits, possible early action crediting
positioning in face of major growth in social investing
meet fiduciary commitments to shareholders and other stakeholders
Benefits of CCX
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Rationale For Business Leadership to Build the Carbon Market
“It's because by participating in the Chicago Climate Exchange, whichreally governs IBM's own business operations and our company's owncarbon footprint, we are better able to understand the entire arena of
creating an inventory of carbon emissions, accounting for them in an auditready manner, presenting them to an exchange so they can be verified
and considered to be tradable and how one does and doesn't makemoney on an exchange”
Wayne BaltaIBM
VP, Corporate Environmental AffairsSeptember 26, 2007
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Web-accessible
secure Electronic Trading Platform
CCX® Comprehensive Market Structure
Member’s Electronic Market Registry Comprehensive Rules System •Emitters: Standard baseline, multi-year allowance stream equal to reduction targets
• Offset Providers (project credits)
• Liquidity Providers• Associate Members
©2008 CHICAGO CLIMATE EXCHANGE, INC.
188,422,450
22,903,0008,400,000
219,725,450
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
Internal On-siteEmission
Reductions atMember Facilities
Project-basedOffsets
ForestManagement
Total
met
ric
tons
CO
2
86%
10% 4%
Emission Reductions and Project-based Offsets in CCXYears 2003 through 2006* (metric tons CO2)
*As of 5-20-08. A portion of new member emission reductions are currently undergoing verification.
©2008 CHICAGO CLIMATE EXCHANGE, INC.
CCX Monthly Price & Volume
Price (US$/metric ton CO2)
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
Dec
-03
Mar
-04
Jun-
04
Sep
-04
Dec
-04
Mar
-05
Jun-
05
Sep
-05
Dec
-05
Mar
-06
Jun-
06
Sep
-06
Dec
-06
Mar
-07
Jun-
07
Sep
-07
Dec
-07
Mar
-08
Date
Vo
lum
e (
MT
)
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
$5.50
$6.00
$6.50
$7.00
$7.50
$8.00
Pri
ce
©2008 CHICAGO CLIMATE EXCHANGE, INC.
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2005 2006 2007 2008
Chicago Climate Exchange Average Daily Volume (metric tons CO2)
Value of Annual Allocation approx: $3.8
billion
2008 vintage spot price:
CCX CFI: $7.40
Value of daily turnover: approx: $2.4 million (annualized = $600
million/yr)
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Target Actions with Major Mitigation Potential
− Non-CO2 gasses: low-cost, multi-benefit
− Agriculture: soils hold 183 years of global CO2 emissions
− Forestation: forests hold 75 years of global CO2 emissions
− Advance broader societal goals: sustainable agriculture and forestry, energy efficiency, renewables
− Advance all mitigation options identified by IPCC, others
SES Field Inspector conducting
soil sampling in no-till corn
Defining CCX Offsets: Principles
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Verified Offset projects sequester or eliminate GHGs, earn Carbon Financial Instruments marketable to CCX members
Pre-defined offset projects:− Landfill, agricultural coalmine methane destruction − Carbon sequestration: reforestation, agricultural soils: standardization− Renewable energy, fuel switching, energy efficiency, ODS destruction− Independent verification by authorized entities: SGS, DNV− Others in development, as per member requests
Minnesota dairy farmer receives first check from sales of
methane-destruction CCX Offsets
CCX Emission Offsets Program
©2008 CHICAGO CLIMATE EXCHANGE, INC.
CCX Offset Projects--Standardized Verification by World-Leading Entities
Agricultural Methane Capture and CombustionAgri-Waste Technology, Inc.SES Inc.TUV SUD Industrie Service GmbH
ForestryBVQiForecon Inc.SGS TUV SUD Industrie Service GmbH Winrock International
Agricultural Soil Carbon SequestrationAgri-Waste Technology, IncAssociation of Illinois Soil and Water Conservation DistrictsNorth Dakota Association of Soil Conservation DistrictsSES Inc.Agriculture Financial Services CorporationSaskatchewan Crop Insurance Corporation
Energy EfficiencyEconergy Corporation InternationalFranklin Energy ServicesICF Consulting Canada Inc.TUV SUD Industrie Service Gmbh
Landfill MethaneARM Group Inc.Det Norske Veritas (DNV)Econergy Corporation InternationalFirst Environment Inc.Richardson Smith Gardner and Associates, IncKleinfelderTUV SUD Industrie Service GmbH
SGS is a world leading inspection, verification, testing and certification company, and is recognized as a global benchmark for quality and integrity. With more than 48'000 employees, SGS operates a network of over 1’000 offices and laboratories around the world.
DNV is a leading independent greenhouse gas verifier operating globally. Their GHG experts are used by international organizations, governments, and industry, delivering independent, third party services for climate change activities.
35
©2008 CHICAGO CLIMATE EXCHANGE, INC.
CCX Membership Accomplishments
• Four compliance cycles successfully executed: major emissions cuts achieved
• Four years of continuous transparent public carbon prices
• Hundreds of Meetings of CCX Governance Committees: rules address nearly all now-viable GHG mitigation options identified by IPCC
• Over 11,000 trades executed, cleared and delivered
• Major knowledge gain by diverse members, as well as verifiers, traders, etc.
• Full integration of multiple offset types, with scale
• All mitigation activities covered under CCX rules are contained in draft U.S. cap-and-trade legislative proposals
©2008 CHICAGO CLIMATE EXCHANGE, INC.
U.S. House of Representatives Purchases Emission Offsets Through CCX as Part of “Greening the Capitol” Initiative
Auction results Announced November 1, 2007
U.S. House acquired balanced portfolio of 30,000 metric tons CO2 of verified U.S. domestic offset projects involving: agricultural methane, coalmine methane, landfill
methane, agricultural soils, reforestation, renewable fuels*
CCX Chairman & CEO, Dr. Richard L. Sandor; U.S. Representative Rahm Emanuel;U.S. House of Representatives CAO Dan Beard; U.S. Representative Dan Lipinski;
U.S. Representative Mark Kirk * auction was oversubscribed with a weighted average clearing price of $2.97 per ton
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Key Issues to Watch in U.S. Legislation
• Included sectors, targets, gasses, timetables (start date, true-up periods)
• Availability and cost of domestic and international offsets
• Safety valves? (price, quantity, policy?)
• Openness to domestic and international project-based offsets
• Parallel technology and policy development efforts (e.g. CAFE standards)
• International market and policy linkages
• Initial Allocation of tradable permits
• grandfathering
• auctions
• benchmarking
• accommodation of growth/new entrants?
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Main Features of Leading GHG Limitation Proposals in U.S. Senate
Legislative
Proposal
2020
emission
Targets
2030
emission
Targets
Coverage/style Early
Actions
Credited?
Other
Lieberman/ Warner
(with: Coleman R-MN, Harkin D-IA, Dole R-NC, Cardin D-MD, Collins R-ME, Klobuchar
D-MN. (S. 2191)
Equal to 1990 level
22% below
1990 level
Most of the economy covered;
downstream for
large coal burners,
upstream for
liquid fuels + natural gas
Yes,
documented emission cuts
plus early “projects”
Large/growing auctions - proceeds
for efficiency, technology etc.
allows borrowing
from future (with interest); market
overseen by “Carbon Market Efficiency
Board”
Bingaman/ Specter
(with:Akaka, D-HI, Harkin, D-IA, Casey,
D-PA, Murkowski, R-AK, Stevens,
R-AK
(S. 1766)
Equal to 2006 level
(~5% above
2000 levels)
1990 level Most of the economy covered;
downstream for
large coal burners,
upstream for
liquid fuels + natural gas
Yes – documented
emission cuts
Auctions smaller than L-W, but grow
Price cap starts
at
$12/ton, rises {5%/yr + inflation
rate}
©2008 CHICAGO CLIMATE EXCHANGE, INC.
Bi-Partisan Views on CCX
“The Chicago Climate Exchange is providing an innovative means of involving American businesses and citizens in the effort to protect the environment…I listed my farm in Indiana on the Chicago Climate Exchange to set an example for farmers and foresters in my state and throughout America…For example, the exchange mechanism could be utilized by turning unused farmland into tree farms that sequester carbon while providing farmers with extra money… In short, American farmers could become the vanguard in using market forces to the benefit of both the environment and the pocketbook…” Senator Richard Lugar (R-IN), Chairman of Senate Foreign Relations Committee
“To deal directly with climate change, something we failed to do in the last energy bill, we should use a market-based strategy that gradually reduces harmful emissions in the most economical way…..Right here in Chicago, the Chicago Climate Exchange is already running a legally binding greenhouse gas trading system” Senator Barack Obama (D-IL), April 3, 2006
“The CCX is leading the way toward a future in which reducing greenhouse gases could bring not only environmental rewards, but financial ones too.” Al Gore, from An Inconvenient Truth, 2006 (book version).
“What would be wrong, at least on a theoretical basis, with taking what you have come up with by way of requirements for your (CCX) members and essentially mandating that everybody in the country comply with those?” Senator Jeff Bingaman (D-NM), Chairman Senate Energy & Natural Resources Committee, April 4, 2006