By Jacob Bunge
Of DOW JONES NEWSWIRES
CHICAGO -(Dow Jones)- Trading on the Chicago Climate Futures Exchange has surged this year as the market signs up new participants and existing members increase activity with the first regional U.S. cap-and-trade program taking effect.
After posting record monthly volumes in February, the CCFE surpassed that mark halfway through March as a "sea change in attitudes" sweeps the country, according to exchange chief Dr. Richard Sandor.
As the Obama administration and Congress move quickly to develop the country's first mandatory cap-and-trade program for emissions, "it's no longer a question of if we're going to see a national cap-and-trade program, but when," Sandor said in an interview.
Sandor heads the Chicago Climate Exchange, the dominant U.S. spot carbon market, which operates a voluntary cap-and-trade market in greenhouse gases like carbon dioxide. The Chicago Climate Futures Exchange, a subsidiary, has markets in emissions derivatives.
Volume on the CCX's derivatives markets has taken off as companies sought to comply with the Regional Greenhouse Gas Initiative, or RGGI, a 10-state cap-and-trade program in the Northeast that took effect in January, Sandor said.
The launch of RGGI has been a source of "incredible, exponential growth," for the exchange, Sandor said.
That activity has carried over to the exchange's new contracts, dated for 2013 and beyond, structured around a presumed national cap-and-trade system as financial and industrial entities position themselves in advance of the program, which Sandor sees arriving sometime in U.S. fiscal year 2010.
U.S. market activity for the remainder of the year will largely be tied to Washington's shaping of a cap-and-trade proposal, the timetable set for emissions reductions and the financial exposure that U.S. firms believe they will face under such a program, Sandor said.
He said he is convinced that a cap-and-trade system will be implemented, despite some lawmakers' calls for a carbon tax instead. Critics charge that tying emissions prices to a market exposes them to volatility and possible manipulation.
Sandor dismissed such concerns as "a 1980s question" that was answered by the 1990 Clear Air Act, which created a cap-and-trade market in sulfur dioxide and has reduced emissions by 50%, he said.
He also pointed to success in reducing emissions via cap-and-trade in Europe, where the European Climate Exchange - the Chicago operation's London-based counterpart - also handles the majority of trading.
In the U.S., the Chicago Climate Exchange faces potential competition from the Green Exchange, a venture backed by CME Group Inc.'s (CME) Nymex unit that launched in 2008 but has yet to gain much market share.
-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com
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Publié le 27 mars 2009 Copyright © 2009 Dowjones