European Climate Trading Comes to the US

Sort of.

The Dow Jones Indexes and the Chicago Climate Exchange (CCX) today announced the launch of the Dow Jones/CCX European Carbon Index and Dow Jones/CCX Certified Emissions Reductions (CER) Index.

All contracts used in the indexes’ calculations are the European Climate Exchange Carbon Financial Instrument Futures listed on ICE Futures., which serve as benchmarks for participants seeking exposure to the European Union Emissions Trading Scheme (EU ETS) and Kyoto Protocol Clean Development Mechanism (CDM), respectively.

For those needing a refresher: The EU ETS is the largest emissions trading program in the world. The CDM is a Kyoto Protocol program (which the U.S. is not a signatory of) that encourages developed countries to invest in projects - known as offset projects - that reduce ghg emissions in developing nations in order to offset their own costs of lowering emissions. The RGGI and CCX is different in various ways, including the fact that offset projects (such as no-till farming in the U.S.) are allowed even in the U.S.

According to their press release:

"The Dow Jones/CCX European Carbon Index is composed of actively traded European Union Allowances (EUA) futures contracts on the European Climate Exchange. It measures the present discounted value of EUAs—the carbon credits issued in the European Union Emissions Trading Scheme, across different maturities. The Dow Jones/CCX CER Index measures the present discounted value of CERs—the carbon offset allowances issued by the United Nations under the Kyoto Protocol Clean Development Mechanism, across different maturities". Read the full press release.

Interesting development. Will definitely be tracking this on Viridus - and see what the uptake looks like.