- The Washington Times - Tuesday, June 19, 2001

Twenty-five companies and nonprofit groups have agreed to join a groundbreaking program that will fashion a system for trading credits in greenhouse gases, the chief culprits in global warming.

The Chicago Climate Exchange based in the city known for trading commodities such as wheat, corn and cattle hope the project will become a model for the nation as the Bush administration grapples with solutions to the worldwide problem.

The voluntary plan "would represent a major step forward while an appropriate regulatory framework for greenhouse gases evolves," said Paula DiPerna, president of the Joyce Foundation, which is financing the study.

Richard Sandor, a prominent Chicago businessman and academic who will lead the program, says there is a market for the products, even though the Bush administration has signalled a go-slow approach on global warming by refusing to sign the 1997 global-warming treaty negotiated in Kyoto, Japan.

"We're looking at this like we would any other financial product," Mr. Sandor said. "We're agnostic about the overall issue of global warming."

Mr. Sandor is also chief executive officer of Environmental Financial Products, a Chicago company that has developed other financial services in the environmental arena.

Citing Senate opposition and its own skepticism about the 1997 Kyoto treaty, the Bush administration announced earlier this year that the United States would not sign the pact and reneged on a campaign promise to regulate carbon dioxide, the gas scientists say is mainly responsible for global warming.

The administration is developing other options for combatting the problem, which Mr. Bush shared with European allies last week.

Advocates of the trading system for carbon dioxide believe the plan is the most market-oriented way to fight global warming. It would be modeled largely on a system started in 1990 to reduce emissions of sulfur dioxide and nitrogen, which cause acid rain.

The system voluntary, at least for starters would allocate credits to companies for a given amount of greenhouse-gas emissions. Businesses that develop new environmentally friendly technologies for reducing their output of carbon dioxide could then monetize their innovations by selling their credits to other companies.

The Chicago Climate Exchange plans a 12-month feasibility study. If it can get a consensus among the 25 participating organizations, companies then would voluntarily adopt caps on greenhouse-gas emissions and begin trading.

Participating companies include Dupont, International Paper, Ford Motor Co. and PG&E; National Energy Group, a Bethesda company that operates electricity generators and pipeline facilities.

Environmentalists say they are generally enthusiastic about market-oriented ways to ease global warming but caution that these techniques will remain few and far between without regulatory teeth.

"Ultimately, without a [government-imposed] limit on carbon emissions, it is difficult to see how a real market for greenhouse gas [credits] would work," said Howard Ris, president of the Boston-based Union of Concerned Scientists.

The founders of the Chicago project, keenly aware that a market can only develop if the traded commodity is in limited supply, concede that regulation may be needed to realize their vision.

Mr. Sandor sees the project as a long-term endeavor that eventually could form the core of a government-sanctioned plan for reducing greenhouse-gas emissions.

He pointed out that Midwestern farmers developed the Chicago Board of Trade as a private arrangement among grain farmers in 1848. Fifty years later, the U.S. Department of Agriculture adopted Chicago's system for classifying agricultural commodities as its own.

"We're creating a private-sector initiative that the government could eventually codify into law," he said. "It's a very conventional historical model."

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide