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.

Green PR Stunts Not Worth It

I read this story on the New York Sun website about how the DNC convention in Denver is focused on being the "greenest ever." According to the Sun:

The Democrats have embarked on a highly visible effort to make their convention the "greenest" ever, focusing on everything from expanded recycling to more creative programs like encouraging Denver restaurants to offer "lean 'n' green" meals made with healthful, organic, and locally sourced ingredients. But not all of their environmentally friendly initiatives have gone as planned. Take the hotel card keys, for example. Instead of the traditional plastic cards, the Sheraton in downtown handed guests Visa-sponsored swipe cards "made from sustainably-harvested wood." The plan lasted all of a few hours. By Saturday night, enough guests had reported problems getting into their rooms with the wooden cards that the front desk clerks had abandoned them and switched back to the plastic cards. A clerk said they were now handing out one of each and suggested that the wooden one could kept as a souvenir.

Wooden key cards? That has to be a gimmick bordering on greenwashing. Where do you draw the line between demonstrating commitment and reality? Any good examples? Please take a minute and share on Viridus.

Buckle Up: Mandatory U.S. Carbon Trading Kicks Off

Without much fanfare, the Chicago Climate Exchange (CCX) began trading futures in carbon credits issued by a new regional cap-and-trade system, the Regional Greenhouse Gas Initiative ("RGGI", pronounced “ReGGIe”). The New York Mercantile Exchange (NYMEX) will also begin trading on August 25.

The RGGI is the first mandatory U.S. cap-and-trade program and is a clear sign of things to come in the U.S. carbon trading market, especially as both presidential candidates, Barack Obama and John McCain, have expressed support for a federal cap-and-trade scheme.

Much negative has been said about the fact that the RGGI will be ineffective in reducing ghg emissions (for a variety of reasons, including the fact that the regional program only applies to fossil fuel fired electricity power providers, and that the emissions reductions required from these providers are too modest).

These (and other) arguments are clearly important, but we shouldn't discard RGGI by reason of its failings.

This is only the beginning of the U.S. emissions trading market, and RGGI offers us unique opportunities for learning, debate and lobbying, knowing that in the future further (more restrictive) cap-and-trade programs will become mandated across the U.S.

The RGGI itself acknowledges this is just the beginning:

Its founding documents expressly state that this regional initiative is meant to “facilitate” not “supplant” future trading programs. In addition, the RGGI’s policy documents recognize that “initially modest emissions reductions is intended to provide market signals and regulatory certainty so that electricity generators begin planning for, and investing in, lower carbon alternatives throughout the region, but without creating dramatic wholesale electricity price impacts and attendant retail electricity rate impacts”. (Also, it is interesting to note that the model for RGGI is actually based on the EPA’s own NOX and SOX Trading Programs).

So it’s probably worth learning about the program and watching the story as it unfolds. Here is a quick “simple” intro to RGGI (with more found inside Viridus).

- The RGGI is a consortium of 10 Northeastern and Mid-Atlantic States that have mandated a trading scheme to curb greenhouse-gas emissions. (For those interested, the states are Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New Jersey, New York, Rhode Island, Vermont. n addition, the District of Columbia, Pennsylvania, Ontario, Quebec, the Eastern Canadian Provinces, and New Brunswick are observers to the process).

- The RGGI only applies to fossil fuel-fired electric generating units serving a generator of 25 MW or larger. This means that the RGGI doesn’t apply to industrial emissions or other types of power providers.

- The RGGI requires signatory states to stabilize power sector CO2 emissions over the first six years of program implementation (2009 - 2014), at a level roughly equal to current emissions, before initiating an emissions decline of 2.5% per year for the four years 2015 through 2018 (i.e., this approach will result in a 2018 annual emissions budget that is 10% smaller than the initial 2009 annual emissions).

- The 2009 to 2014 annual budget allowance is 188,076,976 tons of CO2 per year, going down to 169,269,278 tons in 2018.

- Each CO2 allowance permits the emission of one ton of CO2.

- The first three year compliance period begins January 1, 2009.

- The RGGI apportions CO2 allowances among signatory states and each RGGI state will be offering CO2 allowances for sale in a CO2 Allowance Auction. The minimum bid quantity that can be submitted is 1,000 CO2 allowances (i.e. 1,000 tons of CO2).

- Two pre-compliance CO2 allowance auctions will be held on September 25, 2008 and December 17, 2008, and CO2 allowance auctions will continue to be held quarterly going forward.

- In the September 25^th auction, 12,565 lots of 1,000 CO2 allowances (for the year 2009) will be made available for sale.

Oh yes, there is a minimum financial security of $1,860 if you decide to bid. (The reserve price of $1.86 per CO2 allowance multiplied by 1,000 CO2 allowances).

So buckle up and start bidding.

Which US Carbon Credits to Buy?

Various articles surfaced this week that questioned the value and validity of certain U.S. carbon credits.

The UK newspaper, the Guardian, reports that U.S. carbon credits issued by the CCX, represent emissions reductions that might have happened anyway, even if the exchange did not exist.

“The largest U.S. greenhouse gas emissions market has paid farmers millions of dollars in the name of fighting climate change, but the money may have done little, if anything, to slow global warming.

The National Farmers Union said this month that some of its members had been paid a total of $8 million since 2006 by the Chicago Climate Exchange for taking voluntary actions such as no-till farming. The technique arguably cuts emissions by leaving crop waste undisturbed to decay under the soil.

But many farmers began practicing no-till years before members signed agreements with the CCX, and that is where the problem lies”.

Without the facts, I am not in a position to comment on the validity of these statements, but the allegations do raise a critical point:

Not all carbon credits are created equal, and buyers of carbon credits should do their due diligence as to which carbon credits to buy and where to buy them.

Is there a difference between the CCX and other emerging carbon exchanges like the Green Exchange, which NYMEX launched in March? Join the discussion on Viridus, where Viridus members discuss how to become carbon neutral and the choices available to U.S. companies.

US workers greener than their employers

The good news: More than three-fourths of US workers — 77.7 percent — say that working for a green employer is important to them, according to a new study by Marlin Company ("Attitudes in the American Workplace"), while 51% responded that their employers have implemented a significant sustainability initiative. (Only 49% to go!)

The bad news: When US workers were asked, "Who's greener, you or your company?" Their answers made it clear that most employees think that their companies are not doing enough:

>>> 63.4 percent of workers believe that they are greener than their employers.

In addition, many US workers think they their employers are faking green, with only 17% saying that companies are making an effort to be socially responsible:

- 24.1 percent say that companies want to save money
- 22 percent say that companies want the publicity associated with going green
- 14.1 percent say that companies just want to be politically correct

There is clearly a lot of work ahead for employers who want to drive corporate sustainability goals (including critical cost-savings missions), as well as use green initiatives to galvanize and energize organizational culture.

Big Blue Goes Green

You know it has hit the mainstream when IBM jumps in. Well today IBM announced "Green Sigma" a service offered by their consulting group that, according to their press release, "can help clients lower their environmental impact, increase efficiency and reduce costs by applying Lean Six Sigma principles to energy and water usage..."

At the core of the service is a new management dashboard [why IBM chose to put the demo out as an .exe file we'll never know] that captures non-financial performance metrics. With these projects, implementation is key, but if the the demo dashboard is any indicator of what they're selling, it looks pretty slick.


I've always felt that people pay attention to what you measure and sustainability is no different. I look forward to an active discussion inside of Viridus on what actual IBM customers think about this.

Drink Tap Water

Viridus has lots of great ideas on being green at work, but here is a softball, no-brainer. Stop with the bottled water craziness. I went to an office of a business partner earlier this week and they had cases of bottled water sitting there, all in individual 12 oz bottles. The garbage pail in the conference room was filled with discarded bottles.

This is nuts, especially in Boston where we recently spent $billions on water filtration systems - and our tap water is just as clean as bottled water. Forbes has a good article on the trend away from bottled water.

If you work in an office with bottled water, you have a softball opportunity to impact the environment and help your company save money. Install filtration systems that turn tap water into clean drinking water. Its a no-brainer. Talk to your facilities department today. And if you can't get rid of the bottles, at very least get them to put some recycle bins in the office.

Better yet, just drink tap water. How did we become a country of prima-donnas who can't fathom drinking the tap water we all drank as kids? There is great information available now on the safety of tap water on a town by town basis. And most tap water is perfectly safe (some good info here on the differences between tap and bottled water).

If you can't change the policy on this at work, use good old-fashion peer pressure. How cool will you look drinking tap water, or filtered water, while others are drinking bottled water? Drop some lines about how 90's bottled water is. Ask them if they are also going to have a cigarette in the office. Mention how that bottle of water is more expensive per gallon than gasoline, which by the way is probably now more expensive because so much of it is used to cart around water. Who thought you could be so retro, such a rebel, by simply filling up at the sink?

Seeking Community Manager

Here's a cool opportunity at Viridus, an early-stage startup that aims to change the world.

Viridus is an online, members-only network focused on corporate sustainability. We provide a forum for tips, tools and advice by and for business professionals. While many have defined "green collar" jobs as those jobs involving alternative energy, we believe every job can be a green collar job--it's how you do the job that makes it green or not. IT professionals should be thinking about energy consumption and asset recycling, facilities managers should be measuring and reducing their carbon footprint, buyers should be factoring sustainability into their procurement processes and the list goes on. Viridus provides a forum for business professionals to share best practices and collaborate on practical solutions.

We're looking for someone to join our team either part- or full-time. The person who would be the most successful and get the most out of the role is someone who is passionate about business and the environment, is a "digital native" and is outgoing online. If you or someone you know are interested, please feel free to contact me. No need to send a resume (unless you want to)...better still is to point us to your blog, community or other online presence.