Carbon Credits

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

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Chicago Based Trading Group To Sell Carbon Credits

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