Companies Demonstrate Value of Greenhouse Gas Trades

NEW YORK, N.Y. — a href=http://www.greenbiz.com/frame/1.cfm?targetsite=http://www.pca-online.org>Partnership for Climate Action members Dupont and Entergy traded accumulated emissions reductions on November 1 to demonstrate that market-based trading can address global climate change.

The demonstration trade transferred 125,000 metric tons of CO2-equivalent verified emission reductions from Dupont to Entergy. The greenhouse gas involved in the transaction was nitrous oxide. The specific N2O reductions in the trade were achieved in 2001 at Dupont's Sabine River Works adipic acid plant near Orange, Texas. Dupont's voluntary installation in 1997 of a Dupont-designed catalytic control process accounted for the reduced emissions. This process decomposes the N2O generated in the production of adipic acid into two inert gases, nitrogen and oxygen.

"This shows that emissions trades can have quantifiable business value, and it underscores the strength of our commitment to stabilizing our CO2 emissions," said Jim Mutch, Entergy's vice president of environmental support.

Consistent with PCA guidelines, Entergy and Dupont both have established targets and timetables for reducing or capping greenhouse gas emissions associated with their operations. Dupont's target was to reduce its global CO2-equivalent emissions by 40% below a 1990 baseline by the year 2000. Entergy established a target of stabilizing CO2 emissions from its U.S power plants at 2000 levels through 2005. To meet its target, Entergy set guidelines to achieve 80% of the reductions through internal actions at its facilities and operations, and 20% through external offset projects and emissions trades.

Through actions, including investing more than $50 million in facility retrofits, Dupont has been able to achieve reductions in excess of its target. In early 2002, Dupont and Entergy began discussing a demonstration trade to show that Dupont could benefit from its surplus greenhouse gas reductions, while assisting fellow PCA member Entergy in achieving its target. Entergy and DuPont estimate that their trade will fall within the estimates of a recent analysis by emissions brokerage firm Natsource which indicated that verified emission reductions currently trade in the range of $1 to $5 per CO2-equivalent ton.

The PCA is a joint project of business and environmental leaders dedicated to climate protection. The two companies consulted with other PCA members in the process of structuring and implementing the trade, in order to further the PCA's common purpose of employing innovative strategies and harnessing market mechanisms to maximize reductions in greenhouse gas emissions.

"The PCA believes the business community should lead in demonstrating the use of market mechanisms, such as emissions trading, and that these types of actions should be recognized by government," said Jessica Holliday, who represents Environmental Defense on the PCA's Management Committee.