However, this comes at a time when the U.S. climate bill sits on the brink of collapse, which could also have repercussions for the voluntary market.
“A lot of the voluntary investors were getting in because they wanted to get ahead of the curve,” said Terence Gallagher, an independent carbon strategist. “And now people are on the sidelines waiting to see what’s going to happen so you’re going to see less people willing to take the plunge and get into the voluntary market.”
The Senate was expected to unveil legislation today but the bill became stalled after a key GOP ally pulled his support because of an unrelated immigration reform dispute. The CCX has no comment on the situation at this time.
Another hurdle facing the carbon market is fragmentation on the national and international levels. While Europe currently has two types of credits which are generated in Kyoto signatory countries, the United States is divided between the Regional Greenhouse Gas Initiative [RGGI] and the California Action Climate Reserve, said Gallagher.
“There’s too many markets,” he said. “It’s not there until we get a standard product that’s tradable across all different countries.”
China, another nation often scrutinized for its large carbon footprint has also taken considerable interest in emissions trading, said Sandor.
“I have more ease in explaining cap and trade in China at universities, than I do in the United States,” he said. “There is an undergraduate emissions trading club in Peking University.”
In fact, the CCX has partnered with China’s largest oil and gas producer and supplier CNPC and the City of Tianjin to develop sulfur dioxide emissions and water pollutants markets. The exchange has also teamed up with China’s central bank to establish a research institute in Chicago and Beijing to advance corporate and industrial use of emissions markets.
“They have their eye on the ball,” said Sandor. “I had lunch with the chairman, Governor Zhou, and he’s like their Ben Bernanke. And Governor Zhou knows more about cap-and-trade than half or 75 percent of the people I know anywhere. So when a central banker can talk chapter and verse about emissions trading, it’s telling you something.”