Emissions trading begins.

• Author: Rao, Anand
• Position: Environmental Intelligence - Chicago Climate Exchange (CCX

In January 2003, officials from the Chicago Climate Exchange (CCX) announced the launch of their greenhouse gas (GHG) trading market. The exchange, which is expected to be operational this spring, is an attempt by the city of Chicago and some leading U.S. and international companies, such as American Electric Power, International Paper and STMicroelectronics, to achieve GHG emission reductions through emissions trading, a market-based approach to mitigating climate change. The 13 companies in the exchange have made a legally binding commitment to reduce their GHGs by 4 percent below the average of their 1998-2001 emissions by 2006.

With the Bush administration's rejection of the Kyoto Protocol, American companies do not face the immediate threat of binding emissions commitments. But some large US companies are moving toward such commitments on their own, driven by anticipation that mandatory emissions reductions may be coming in the future, and that getting started now may be a good business strategy. Participation in the market can help a company get a jump on its future competition either by developing less-polluting production processes or by establishing reliable trading relationships with other companies that can better afford the...