F O R WAR D BU S I N E S S
Cash for
Carbon
The Chicago Climate
Exchange is taking off.
But will it soar?
BY KIERA BUTLER
traditionally, the giant chemical manufacturer DuPont has not exactly been an
insider in environmental circles. But it is one
of a growing number of companies that realize green measures save money; since 1990,
DuPont’s energy reduction program has saved
the company $3 billion. And in the past few
years, the company’s reductions have not only
made for savings—they’ve also generated
income. In January of 2003, DuPont became
a founding member of the Chicago Climate
Exchange (CCX), the nation’s only voluntary
greenhouse gas emissions trading marketplace.
Although DuPont will not discuss the specifics, it is public knowledge that every year the
company has surpassed its reduction targets.
What’s more, DuPont has sold its extra allowances and made a profit. “We wanted to see
whether trading works, whether it can be done
efficiently, in a way that makes sense,” says Ed
28 | Feb/Mar/07 plentymag.com
Mongan, the company’s energy and environment programs director.
Economist Richard Sandor founded CCX
on the belief that it could—and that the
most effective way to fight global warming is
a carbon dioxide cap-and-trade system. The
“cap” refers to an overall limit on the amount
of carbon a particular company, city, state,
or country can produce. If a member stays
under the limit, it can “trade,” or sell, its
extra allowances to other companies—similar to the New York Stock Exchange, except
that instead of shares in companies, CCX
members trade emissions. Those who don’t
meet their reduction requirements must either buy allowances from others or purchase
“offsets”—credits from approved sources,
such as organizations that plant trees. CCX
regulates members by setting reduction goals
and requiring yearly third-party audits.
It’s not a new idea. In the ’70s, the federal
Acid Rain Program led to a significant reduction in sulfur emissions in the U.S. Cap-andtrade, economists say, works because it provides financial incentive for businesses to curb
pollution. What’s more, says Tom Tietenberg,
an economist at Colby College, companies are
more likely to warm to the idea of a cap-andtrade system than to a tax, which he points
out, “is a four-letter word in the U.S.”
In 2003, with two grants from the Joyce
Foundation, a Great Lakes–based philan-
ILLUSTRATION BY CHRISTOPHER SILAS NEAL