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?