Isra-Mart srl:Analysts champion US carbon markets despite exchange closure

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Analysts have insisted the American carbon market is alive and kicking, despite plans to scrap the pioneering Chicago Climate Exchange (CCX).

CCX's parent firm, Intercontinental Exchange, last month confirmed it will close the doors on the Chicago-based pilot project at the end of this year, blaming a lack of government legislation and the failure of Congress to pass an energy and climate change bill that would have allowed the formation of a national emissions trading scheme.

Media reports in the US have suggested CCX's closure is the final nail in the coffin for President Obama's plans for an emissions cap-and-trade scheme.

"Economy-wide cap and trade died of what amounts to natural causes in Washington," Fred Krupp, president of the Environmental Defense Fund, which supported the proposals, told Fox News.

But in Europe, analysts have insisted the US carbon market can continue to develop, arguing that the closure of the CCX will have little impact on either US or European markets.

"[There are] no implications for the EU and UK," Emilie Mazzacurati, head of carbon research for North America at Point Carbon, told BusinessGreen in an email.

"The parent company of CCX, Climate Plc, recently acquired in full by ICE, still owns the very successful ECX [European Climate Exchange] and the ECX is operating normally," she said.

She added that the closure of CCX is "by no means" the end of carbon trading in the US, pointing out that regional programmes in the US would continue operating, including the Regional Greenhouse Gas Initiative (RGGI) in the north-east US, and another initiative spearheaded in California and incorporating large Canadian provinces, which is slated to start in 2012.

"This is not even the end of trading for Climate Plc in the US," she added. "Their regular exchange, the Chicago Climate Futures Exchange (CCFE), continues to operate normally."

Mazzacurati also observed that CCX credits had recently traded for "pennies" and that the exchange was coming to its natural end, as it had only ever been set up as a pilot project.

The main benefit of the programme had been to teach early adopters about carbon trading, she said.

"The effects on carbon markets globally are null, except for the fact that the CCX shutting down highlights the failure of the US Senate to pass a cap-and-trade bill," she concluded.

Mazzacurati's comments were echoed by Allesandro Vitelli, director of strategy at IdeaCarbon, who similarly predicted the closure of CCX would not impact any other market because it was a voluntary programme, detached from other schemes.

"CCX is a voluntary scheme and not interlinked with any other markets, so the targets are not very demanding," he told BusinessGreen, adding that a lot of the offsets on the exchange "do not represent the most environmentally strong reductions", such as credits issued against no-till farming projects where farmers leave soil undisturbed.