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September 16, 2009
Carbon Disclosure Project Forms Partnership with Chicago Climate Exchange
    by Robert Kropp

Partnership intends to raise visibility of greenhouse gas emissions measurement and reporting, and increase opportunities for companies and investors.

The Carbon Disclosure Project (CDP), a nonprofit organization that has amassed the world's largest database of climate change information relating to corporations, has formed a partnership with the Chicago Climate Exchange (CCX) to "provide policy makers and the marketplace with new insights into how good measurement, reporting and carbon management not only cuts emissions, but also unlocks the key to significant commercial opportunities for companies and investors alike," according to Paul Dickinson, CEO of the CDP.

The CDP obtains its GHG emissions data by means of annual Information Requests, issued to 3,700 corporations on behalf of 475 institutional investors, as well as purchasing organizations and government bodies. Corporate responses to CDP requests for information are voluntary.

As the CDP's exclusive Global Exchange Partner, CCX will work with the CDP on efforts related to corporate emissions disclosure and greenhouse gas (GHG) management. The partnership plans to issue a white paper on commercial and revenue opportunities relating to GHG emissions management in China, where CCX has established the Tianjin Climate Exchange (TCX).

CCX operates North America’s only cap and trade system for GHG emissions management. The CCX tradable commodity is the Carbon Financial Instrument (CFI), which represents 100 metric tons of CO2 equivalent (CO2e). CCX members commit to annual GHG emissions reduction targets, and those whose emissions exceed targets comply by purchasing CFIs from members that reduce emissions below targets.

The legally binding compliance regime established by CCX is subject to third-party verification by the Financial Industry Regulatory Authority (FINRA), an independent regulator for securities firms doing business in the US.

The American Clean Energy and Security Act, which passed the US House of Representatives in June, would establish a cap and trade program for reducing GHG emissions from the industry sectors that collectively are responsible for 85% of US global warming emissions. However, the Act as written proposes to provide up to 90% of allowances to companies for free until 2026. In part due to regulatory uncertainty, the price of emissions credits issued by CCX has dropped from a high of over $7 in May, 2008 to $0.25 on September 15. The volume of trading on the CCX has fallen by 44% in the first half of 2009.


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