Markets in Everything, Except Greenhouse Gases

In 2002 Time named Richard Sandor a “Hero of the Planet” for founding the Chicago Climate Exchange (CCX). The CCX traded permits based on voluntary but binding commitments from firms to cutback on carbon emissions and other greenhouse gases.  Without enforced limits, however, or, if you prefer, without property rights in emissions, the market is not self-sustaining and CCX is cutting workers and may be wound down.

CCX founder Richard Sandor had hoped the exchange would become the hub for a national regulated market for greenhouse gas emissions to be kick-started by a U.S. climate change bill.

But prices for the carbon credits traded on the bourse since its 2003 launch, which were based on voluntary but legally binding emissions reduction commitments by its members, have crashed to around 10 cents a tonne from all-time highs of over $7 in 2008, and trading volumes have largely dried up.

Although the U.S. has vowed to cut its greenhouse gas emissions by 17 percent below 2005 levels by 2020, and despite the House of Representatives narrowly passing an ambitious climate bill in June 2008, several similar bills have stalled in the Senate in the past year.

“(The layoffs) seem to indicate that this market player thinks any U.S. climate action is still a way off,” said commodities house FCStone…