US climate exchange ready to start trading
By Nikki Tait in Chicago
Published: March 29 2001

The Chicago Climate Exchange, a voluntary carbon-dioxide emissions trading platform which is being developed on a pilot basis in the Midwest, could start trading late this year or early in 2002.

Richard Sandor, who is spearheading the project, is expected to tell a US Senate committee on Thursday that a range of potential participants have expressed interest in the exchange - from power utilities to agricultural co-operatives.

The latter could benefit because they would have carbon dioxide "offsets" to sell - to the extent that farmers' land-management practices resulted in carbon sequestration (the capture and storage of carbon dioxide in the soil).

Mr Sandor said on Wednesday that four co-operatives were discussing participation in the exchange, including Midwest-based Growmark. "Farmers are going to be able to produce two crops," said Mr Sandor, arguing that traditional crop income could be augmented by the environmental credit sales.

The Senate committee hearings come at a time when there are some signs of increased interest in using emissions trading to help reduce greenhouse gases - BP, for example, has instituted an internal carbon- emissions trading regime - but the idea remains controversial.

The United Nations conference on climate change at the Hague last November failed to agree on a legal framework for international emissions trading.

Separately, the Chicago Board of Trade, which handles an annual auction of sulphur dioxide emissions allowances for the US Environmental Protection

Agency, on Wednesday announced the second-highest proceeds to date. A total of 128,388 spot allowances were sold, with an average winning price of $174.97 and a clearing price of $173.57.

Enron, the US utility, was the biggest purchaser. The auction of seven-year advance allowances produced a clearing price of $105.72, and an average winning price of $110.75. Proceeds, at $36.4m, were second only to the 1999 figure.