Chicago Climate Exchange Set to Go on ICE

Intercontinental Exchange Inc. (ICE), a leading operator of regulated global futures exchanges and markets, has announced its acquisition of London-based Climate Exchange Plc, the parent of, among other exchanges, the Chicago Climate Exchange and the Chicago Climate Futures Exchange.

The £395 million ($603 million) deal would create a single trading platform for environmental contracts worldwide. Atlanta-based ICE, which already provides technology and clearing services to Climate Exchange, said it would combine the British company’s emissions markets with its own futures and energy markets. “The leadership that Climate Exchange has shown in establishing market standards in Europe, and increasingly the U.S. and Asia, has driven its success,” said ICE Chairman and CEO Jeffrey C. Sprecher,” and we see continued growth opportunities within these nascent markets globally.”

The Chicago Climate Exchange is the world’s first voluntary, contractually-binding cap and trade system for greenhouse gas emissions reductions, and the largest such exchange in the U.S. “Carbon, when it becomes worldwide, will be unambiguously the largest commodity in the world,” Chicago Climate Exchange Chairman and founder Richard Sandor said recently in an interview with CNBC. “The world emits 35 billion tons; it’s priced at $20. That’s $700 billion.” Climate Exchange dominated exchange trading in European Union carbon permits last year, a market worth around $100 billion in 2009.

The new international exchange will no doubt leverage the differing sentiments across the globe regarding carbon credit trading. China, for example, is often admonished for its immense—and growing—carbon footprint. But as Sandor, Time magazine’s “Hero of the Planet” in 2002, points out, the Chinese appear to have a better understanding of the situation. “I have more ease in explaining cap and trade in China at universities, than I do in the United States,” he said. “There is an undergraduate emissions trading club in Peking University.”

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