Canada’s first emissions trading market, the Montreal Climate Exchange, opened for business this morning, becoming part of the $64 billion global carbon-credit market. The exchange is a joint venture between the Montréal Exchange (MX) and the Chicago Climate Exchange (CCX), and participating companies can buy and sell carbon credits depending on how much they pollute.
At a launch ceremony Luc Bertrand, President and CEO of the Montréal Exchange, called the exchange “the first regulated environmental market in Canada.” Canada certainly needs to take some kind of market-based action, because, as Bloomberg notes, Canada’s emissions actually rose the fastest out of the Group of Eight industrialized nations from 1990 to 2004.
Reuters says “early volume was light,” on the exchange, which is to be expected. But Bloomberg says that could also be because some Canadian companies “have little interest in the market because the government is allowing companies to meet their emissions targets by paying into a fund, and is subsidizing equipment to trap carbon dioxide underground.”
Carbon markets have emerged in recent years, as governments worldwide are setting up regulations to put a cap on how much carbon companies can emit. The European Union has a mandatory carbon market, and in the U.S. the Chicago Climate Exchange involves companies that voluntarily join and pledge to reduce their greenhouse gas emissions by about one percent annually.
Carbon trading and markets certainly aren’t without skeptics: Last March, Newsweek ran a story entitled “?The Carbon Folly,”? that claimed current efforts have done little to reduce overall carbon emission, particularly in the EU, where some argue governments were too lax with setting caps. Earlier this month the UN’s Clean Development Mechanism (CDM), a system whereby developed nations can earn certified carbon offset credits (CERs) by funding clean energy projects in the developing world, came under fire from two separate reports. Both accused the CDM of not adequately verifying that their credits are indeed being awarded to programs that would have otherwise not happened, an issue known as “additionality.”