Carbon Credits


| June 4, 2003


In a bold move to unite capital gains and environmental stewardship, the city of Chicago has partnered with 14 major companies to create the Chicago Climate Exchange (CCX), reports David Miller for Market to Market. Founding members of the CCX include Ford, DuPont, and American Electric?the largest power company in the United States. The CCX ?cap and trade? model is simple: Companies whose greenhouse gas emissions are below the federally mandated maximums can sell their remaining shares to others who have exceeded their limit, thus placing a premium on environmental responsibility.

Additionally, farmers and forestry industries can earn income by ?sequestering? carbon emissions on their properties. The CCX has determined that 1 metric ton of carbon will equal one carbon credit. Thus, an area of ?densely planted pines? which holds 600-700 metric tons will be worth 600-700 carbon credits per acre. An acre of 15-year-old birch trees will be worth 1-2 carbon credits. Grasslands will be worth approximately 3/4 carbon credits per acre, and a farmer utilizing ?no-till? techniques will earn 1/2 carbon credit per acre. The price per credit will be determined by a market value which, according to a World Bank estimate, could be $1-$5 per share.

In the past, cap and trade systems like the one adopted by the EPA in 1990 to reduce sulfur dioxide emissions have been widely criticized for controlling, but not lowering emissions. What makes the CCX unique is their members? commitment to lowering their total emissions 1 percent per year for the next four years. The CCX will open its doors to North American participants later this spring and expects to expand internationally in 2004.
?Erin Ferdinand

Go there>> Chicago Based Trading Group To Sell Carbon Credits



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