14 Organizations to Cut Greenhouse Gases 4% by 2006

14 Organizations to Cut Greenhouse Gases 4% by 2006

Fourteen organizations, including several large corporations, have entered into a legally binding agreement to cut their greenhouse gas emissions by 4% within the next four years. The 14 entities announced last week that they are forming the Chicago Climate Exchange, a voluntary cap-and-trade program for reducing greenhouse gas emissions. The program will allow entities that exceed their emissions goal to sell carbon credits to organizations that are falling short. Trading will begin in spring, and will include so-called "sinks" -- farm and forestry projects that help reduce greenhouse gas concentrations in the atmosphere -- as well as "offsets," which are emissions-reducing projects in other countries that are funded by the U.S. entities.

The announcement marks the first time major companies in multiple industries have made a voluntary binding commitment to use a rules-based market for reducing their greenhouse gas emissions. CCX will enable them to receive credit for such reductions and to buy and sell credits in order to find the most cost-effective way of achieving reductions. Trading is targeted to begin in the spring of 2003.

The 14 entities include American Electric Power; Baxter International Inc.; the city of Chicago; DuPont; Equity Office Properties Trust; Ford Motor Company; International Paper; Manitoba Hydro; MeadWestvaco Corporation; Motorola, Inc.; STMicroelectronics; Stora Enso North America; Temple-Inland Inc.; and Waste Management, Inc.

“The private sector’s response to the initiative has been incredible,” says internationally known financial innovator and Chairman and CEO of CCX, Dr. Richard L. Sandor. “These companies have demonstrated tremendous leadership. They really believe that a proactive approach to climate change advances everyone’s long-term interests. It’s simply good business.”

CCX will administer this pilot program for emission sources, farm and forest carbon sinks, offset projects and liquidity providers in North America. To foster international emissions trading, offset providers in Brazil can also participate. The development of CCX resulted from feasibility and design studies that were funded by grants from the Chicago-based Joyce Foundation and administered by Northwestern University’s Kellogg Graduate School of Management. Environmental Financial Products, LLC conducted the research and development effort.