Isra-Mart srl : US carbon trading could cease by the end of the year

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Businesses seem to have called time on the US's only national carbon trading market, blaming an absence of legislation as emissions-trading laws remain mired in Congress.

The Chicago Climate Exchange (CCX) operates a cap-and-trade scheme which, since its launch in 2003, has attracted major players such as Ford, Bank of America, IBM and Intel.

Members made a voluntary but legally binding commitment to meet greenhouse gas emission reduction targets either by cutting emissions or by buying emissions permits sold by members.

The scheme relied on the government setting mandatory caps on emissions – legislation that has not emerged after the Democrats abandoned plans for cap-and-trade legislation over the summer.

Republican gains in today's mid-term election would likely push the possibility of legislation even further off the agenda.

Cap and trade remains a loss-making business in the US and yesterday Jeff Sprecher, chief executive of IntercontinentalExchange, which owns the CCX, told the Financial Times that companies wanted to pull out.

"The voluntary market that was created has an expiration date of the end of this year in it," he said. "The bulk of the users have said to us that they really don’t want to continue to trade voluntarily in the absence of any credit for their work by the current administration."

Last week California outlined its plans for a state-wide cap-and-trade scheme, the first step towards realising a joint trading scheme by 2012 across members of the Western Climate Initiative, an alliance of 11 states and Canadian provinces.