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What is the Chicago Climate Exchange?

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  • Written By: Mary McMahon
  • Edited By: Bronwyn Harris
  • Last Modified Date: 09 October 2014
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The Chicago Climate Exchange (CCX) is a company which has been established to facilitate reduction of emissions of greenhouse gases. It works within the framework of a cap and trade system, with members of the CCX agreeing to reduce overall emissions by a set amount, and also being allowed to trade emissions credits with each other. Since the United States has repeatedly refused to sign the Kyoto Protocol, the Chicago Climate Exchange is designed to help fill the regulatory gap left by lack of Kyoto controls in North America.

This organization was founded in 2003 by Richard Sandor, who perceived the need for a climate exchange in North America. Members of the Chicago Climate Exchange sign a legally binding agreement to reduce their emissions, and in exchange for this agreement, the companies are issued credits, which they may use or sell. Companies which don't use all their credits can sell them to other companies which have not been able to reach the necessary state of efficiency, thereby reducing overall emissions by maintaining a “cap” on total emissions.

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Cap and trade systems are already widely in use in other parts of the world, and in some ways, the Chicago Climate Exchange is simply a market response to the issue. By trading credits in various greenhouse gases, the member companies can contribute in a positive way to the environment, allowing themselves to use the coveted “green business” label in their marketing. These companies can also be more competitive with companies in other parts of the world which already have cap and trade systems.

The rise of institutions like the Chicago Climate Exchange illustrates the growing global concern about global warming and climate change issues. Cap and trade systems for various pollutants have been in use since as early as 1990, but these systems have become much more widely used and accepted by members of the business world as they realize that being environmentally friendly is profitable. Some very high profile companies are members of the Chicago Climate Exchange, including Motorola and Ford, demonstrating widespread interest in the trading of pollution credits and in a desire to remain competitive on the open market.

Some people have pointed to the proactive establishment of the Chicago Climate Exchange as an argument against government regulation of greenhouse gases, suggesting that companies will respond to the issue of global warming on their own. However, others hasten to point out that the Chicago Climate Exchange arose in response to similar systems around the world, helping North American companies compete globally and prepare for potential government crackdowns on greenhouse gas emissions. While the Chicago Climate Exchange is certainly a valuable step in the right direction, these critics feel that government regulation is still needed, making cap and trade systems mandatory, rather than optional.

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