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The Chicago Climate Exchange (CCX)
Instigating Change or Business-As-Usual?
Chelsea Acosta
Brittany Camp
Amar Kelkar
Grace Leonard
Christel Trutmann
Ellie Walsh
Roland Wang
Environmental Governance 30 April, 2008
Question and Outline
Is the CCX effective in pushing environmental change, or are companies manipulating the system without reducing emissions?
Overview of CCX Review of members
Universities, Chemical Industry (DuPont) Offsets FINRA Criticisms
Key Terms
Carbon offsets Carbon Financial Instrument (CFI) Baseline emissions GHGs “Business-as-usual”
States, Counties and Cities Member States
Illinois New Mexico
Member Counties King County, WA Miami-Dade, FL Sacramento, CA
Member Cities Chicago Portland Oakland Aspen Berkley Boulder Fargo Melbourne, Australia
Members
Emission Responsibilities Energy use in city buildings City lighting Contracted work
Public relations Preemptive start before federal market Clean air
Motivations
Members
University members of the CCX
Members
A university in the marketplace…
Q. “What are the university’s major actions as a member? (In terms of buying/selling credits, and offsets)”
A. “…our extra credits have been accumulating in the registry. I believe it will be a larger campus decision as to what we do with those credits… We could sell them and reinvest in renewable energy projects… or even let it go into
the general fund (worst case). My concern is that we do something meaningful. By default, if we don’t sell the credits we can retire them and take that carbon off the market. That’s the purest thing to do.”
-P. Ferman Milster, P.E.Associate Director – Utilities & Energy Management
University of Iowa
Members
CCX and the Chemical Industry
For CCX: Large potential reductions Fueling the trade with a huge base of carbon
credits
For DuPont Show investors that they are environmentally
friendly Already reducing anyway Motivation?
Members
Public and Investors angry about Chlorofluorocarbons (CFCs)
DuPont Products w/ CFC’s: R-22 R-134a Freon 12 25% market share in 1980’s
1987: Montreal Protocol, agreeing a 50% decrease in CFC consumption over a 10 year period
Members
DuPont and the CCX
Reductions already being made Largest reductions in CFC’s Successful membership - used as a means to
publicize their reduction efforts Already had monitoring system in place Independent goals for sustainability by 2015
Members
CCX: Approved Offset Projects
Forest Sequestration
Alternative Energy Projects
Agricultural Offsets
Destruction of Released CO2
Do offsets actually reduce CO2 emissions?
No-tilling
What does FINRA do for CCX? FINRA: Financial Industry Regulatory Authority
FINRA acts as the third-party watchdog for the CCXInvolved in:
Registering new participating groups Educating the participants on rules and regulations of the trading
system Enforcing of rules and reporting if companies violate policies
Policies include rules within the CCX and actual laws Acting as the watchdog of the CFI Trading (Market Oversight) Determining emissions baselines for new participants Verifying yearly emissions from participating groups Reporting and verifying offset programs
Criticisms
Private enterprise with little public input Trading system not transparent Loopholes in the rules CCX rules too business friendly Low emission reduction goals Elusive calculation of baseline emissions Power of the CCX or good corporate
citizenship?
Conclusions
The CCX has great potential to catalyze environmental change
But the CCX is not taking its position seriously
Current trading system is not effective
Members are manipulating the system for profit
Policy Recommendations
Eliminate sale of credits from last year With Higher reduction goals (>1%)
Emulate the 1980’s cap-and-trade system
Stricter punishments
Reduce commissions on CFI trades
Questions?
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