Chicago Climate Exchange, Inc.
Jeff Huang
Vice President
July 2009
1
© 2008 Reproduction or quotation of this material is expressly forbidden without the consent of the Author.
Chicago Climate Exchange®, Inc.
CCX-Related Exchanges
Chicago Climate Exchange ™ (CCX) - Voluntary
•
Launched 2003 with 14 members, now 450+ members
•
Self-Regulatory Service Provider: FINRA
European Climate Exchange ™ (ECX) - Mandatory
•
Markets Served: EU ETS, Kyoto Protocol
•
FSA-regulated futures market for European CO2 Allowances
•
Launched by CCX April, 2005 – 80-90% of EU exchange traded volume
Chicago Climate Futures Exchange ™ (CCFE) – Voluntary and Mandatory
•
Markets Served: US Clean Air Act, CCX, Kyoto Protocol, EU ETS, RGGI, CCAR
•
CFTC-regulated futures exchange
•
Launched by CCX in December 2004
Montreal Climate Exchange ™ (MCeX) – Mandatory
•
Market Served: Kyoto Protocol
•
Joint venture with the Montreal Bourse
Tianjin Climate Exchange ™ (TCX) – Potentially Voluntary and Mandatory
•
Joint venture with China National Petroleum Corporation and the City of Tianjin
India Climate Exchange™ – Potentially Voluntary and Mandatory
•
(In development)
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© 2008
Chicago Climate Exchange®, Inc.
CCX-US
(Voluntary, Legally-Binding Emissions Reduction Schedule)
Phase I (2003-2006): Members made legally binding commitments to reduce/trade to 4% below baseline by 2006
Phase II (2007-2010): Members make legally binding commitment to reduce/trade to 6% below baseline by 2010
** Baseline: Average emissions from years 1998-2001 (Phase I), emissions from year 2000 (Phase II)
**
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© 2008 Reproduction or quotation of this material is expressly forbidden without the consent of the Author.
Chicago Climate Exchange®, Inc.
CCX Registry
4
© 2008
Chicago Climate Exchange®, Inc.
CCX Trading Platform
Bids and
offers
Completed
trades
(each
contract is
100mt
CO2)
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© 2008
Chicago Climate Exchange®, Inc.
CCX Membership – Economy Wide
Most Stringent GHG Reduction Commitment in U.S.
Key Sectors
• Electric Power Generation
• Diversified Manufacturing
• Pulp and Paper
• Financial Institutions
• Electronics and Technology
• Agricultural Products
• Electronics
• Chemicals
• Environmental Services
• Universities & Colleges
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© 2008
6
A Selection of Members
®,
Reproduction or quotation of this material is expressly forbidden without
the consent
of theExchange
Author.
Chicago
Climate
Inc.
CCX® Membership Highlights
7
•
Represents 17% of the Dow Jones Industrials, including:
– Bank of America
– DuPont
– Intel
– IBM
– United Technologies
•
Represents 11% of the Fortune 100, including:
– Ford
– Motorola
– Safeway
– International Paper
– Honeywell International Inc.
•
Represents 20% of the largest CO2 emitting utilities in the US, including:
– AEP
Mirant
– Reliant
Dynegy
– Allegheny Energy
TECO
– DTE
Alliant
– NRG Energy
American Electric Cooperative, Inc
© 2008
Chicago Climate Exchange®, Inc.
Comments of IBM
“It's because by participating in the Chicago Climate Exchange, which
really governs IBM's own business operations and our company's own
carbon footprint, we are better able to understand the entire arena of
creating an inventory of carbon emissions, accounting for them in an
audit ready manner, presenting them to an exchange so they can be
verified and considered to be tradable and how one does and doesn't
make money on an exchange”
Wayne Balta
VP, Corporate Environmental Affairs
IBM
September 26, 2007
8 © 2008 Reproduction or quotation of this material is expressly forbidden without the consent of the Author.
Chicago Climate Exchange®, Inc.
CCX Size Relative to National GHG Trading Coverage
CCX includes more industrial emissions under its legally
binding cap than any single country in the world
600
600
Hundred Million Metric tons CO2
[Included emissions]
Source: EU ETS Phase II National Allocation Plans
500
453
445
400
400
[RGGI]
300
[AB32]
246
196
23
21
13
9
8
3
3
Latvia
Luxemborg
29
Slovenia
31
Lithuania
31
Estonia
31
Ireland
37
Hungary
45
Austria
56
Denmark
59
Slovakia
69
Portugal
86
Finland
California
France
Spain
US NE States (RGGI)
Italy
Poland
United Kingdom
Canada
Australia
Germany
CCX
0
Czech Republic
87
100
Sweden
130
New South Wales
133
Belgium
152
Greece
170
The Netherlands
209
200
CCX Member-wide emissions are equivalent to:
•15% of U.S. stationary emission sources
•25% of emissions covered under EU ETS
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Chicago Climate Exchange®, Inc.
Liquidity Providers
Liquidity Provider: Entity or individual who trades on the Exchange for purposes
other than complying with the CCX emissions reduction schedule, such as
market makers and proprietary trading groups.
Selected Liquidity Providers
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© 2008 Reproduction or quotation of this material is expressly forbidden without the consent of the Author.
Chicago Climate Exchange®, Inc.
®
®
CCX CFI Cash/Futures/Options
Based on U.S. Voluntary, Legally-Binding Program
120
*CFI Futures Contract
Launched August 2007
Options
100
**CFI Options Contract
Launched February 2008
Futures
Million (metric tons)
Cash
80
60
*As of 7/16/09
40
20
0
2004
11
2005
2006
2007
© 2008 Reproduction or quotation of this material is expressly forbidden without the consent of the Author.
2008
2009
Chicago Climate Exchange®, Inc.
CCFE® Market Dynamics
•
CFTC Designated Contract Market
•
Clearing services provided by Clearing Corporation
•
Market Surveillance provided by the National Futures Association (NFA)
•
CCFE Products offer:
–
–
–
–
–
•
Standardized contracts
Price transparency / price discovery
Anonymity
Elimination of counterparty credit risk
Leverage benefits
Market hours: 7:00 am to 3:00 pm CST
© 2008
Chicago Climate Exchange®, Inc.
CCFE Products
US Emissions – US EPA Clean Air Markets
•
•
•
Sulfur Financial Instrument® (SFI ®) Futures and Options
Nitrogen Financial Instrument™ - Ozone Season (NFI™ -OS) Futures
Nitrogen Financial Instrument™ - CAIR Annual (NFI™ -A) Futures and Options
US Carbon Products
•
•
•
•
Regional Greenhouse Gas Initiative (RGGI) Futures and Options
Carbon Financial Instrument ® (CFI ®) Futures and Options
U.S. Carbon Financial Instrument (CFI-US®) Jan‘13–Dec ‘15 Futures & Options
California Climate Action Reserve Tons (CCAR-CRT®) Futures and Options
Equity-Index Products
•
•
ECO-Clean Energy Index (ECO) Futures
Dow Jones Sustainability World Index (DJSI-W) Futures *
IFEX™ Insurance
•
•
•
U.S. Tropical Wind ($10, $20, $30, $40 and $50 Billion)
Florida Tropical Wind ($10, $20, $30, $40 and $50 Billion)
Gulf Coast Tropical Wind ($10, $20, $30, $40 and $50 Billion)
Renewable Energy Products
•
•
•
•
New Jersey Renewable Energy Certificate (REC-NJ) Futures
Connecticut Renewable Energy Certificate (REC-CT) Futures
Massachusetts Renewable Energy Certificate (REC-MA) Futures
Voluntary Renewable Energy Certificate (REC-V) Futures
"Dow Jones, World Sustainability IndexSM" are service marks of Dow Jones & Company, Inc. Dow Jones has no relationship to the Chicago Climate Futures Exchange, other than the
licensing of the Dow Jones World Sustainability Index and its service marks for use in connection with the Dow Jones World Sustainability Index Futures products.
© 2008
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Chicago Climate Exchange®, Inc.
Timeline of CCFE Product Launches
Launch
Product
December 2004
SFI Futures
February 2007
NFI-OS Futures
April 2007
SFI Options
July 2007
ECO-Clean Energy Index Futures
August 2007
CFI Futures
September 2007
NFI-A Futures
October 2007
IFEX Futures
February 2008
CFI Options
March 2008
NFI-A Options
August 2008
RGGI Futures & Options
November 2008
DJSI Futures
November 2008
CFI-US Futures
December 2008
CFI-US Options
February 2009
CCAR-CRT Futures & Options
April 2009
REC Futures (NJ, CT, MA & Voluntary)
© 2008
Chicago Climate Exchange®, Inc.
CCFE® Clearing Members
© 2008
Chicago Climate Exchange®, Inc.
CCFE® Market Growth
• Volume Growth:
• 2005 - 171 contracts
• 2006 – 28,924 contracts
• 2007 – 283,758 contracts
• 2008 – 484,320 contracts
• 2009 YTD – 674,733 contracts
*as of 6/5/09
© 2008
Chicago Climate Exchange®, Inc.
Thousands
CCFE® Average Daily Volume Growth
Since 2007
12
10
8
6
4
2
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
'07 '07 '07 '07 '07 '07 '07 '07 '07 '07 '07 '07 08 08 08 08 08 08 08 08 08 08 08 08 '09 '09 '09 '09 '09 '09
© 2008
Chicago Climate Exchange®, Inc.
CCFE® Open Interest Growth Since 2006
160,000
140,000
RGGI Futures
NFI-OS Futures
IFEX
ECO-Index Futures
CER Futures and Options
CFI Futures and Options
NFI-A Futures and Options
SFI Futures and Options
120,000
100,000
80,000
60,000
40,000
20,000
-
*as of 6/5/09
© 2008
Chicago Climate Exchange®, Inc.
CCFE Futures Platform
© 2008
Chicago Climate Exchange®, Inc.
CCFE Options Platform
© 2008
Chicago Climate Exchange®, Inc.
Current Active U.S. Carbon Markets
• Government Mandated – Regional Greenhouse Gas Initiative (RGGI)
• 10 Northeastern States
• 188 million ton cap – stabilization of emissions through 2014
• Voluntary, legally binding – CCX
• 450 Members
• Approx 600 million tons under cap
• 6% Reduction of emissions by 2010 from 2000 levels
• Voluntary Offset Standards
• Chicago Climate Exchange (CCX)
• California Climate Action Registry (CCAR)
• Voluntary Carbon Standard (VCS)
• Gold Standard
© 2008
Chicago Climate Exchange®, Inc.
RGGI Futures & Options
•
•
•
•
Physically deliverable futures contract (and European style options on futures)
for Regional Greenhouse Gas Initiative Allowances – the first governmentmandated CO2 emissions trading program in the U.S
Each contract represents 1000 RGGI allowances, which represent 1,000 short
tons of CO2
Launched: August 2008
Tick Size: $0.01 ($10.00 per contract)
Transaction Fees: $1.60 per contract per side (Member); $2.00 (Non-Member)
•
Current Margin requirement: $450 per contract
•
Market Highlights:
•
• Current Open Interest* 31,441 contracts
• Over 237,717,000 allowances traded on CCFE
*as of 5/28/09
© 2008
Chicago Climate Exchange®, Inc.
RGGI: 1st Mandatory Carbon Market
in U.S. Exhibits Dramatic Growth
•
•
•
•
•
•
1st RGGI Auction: 12,565,387 Allowances
2nd RGGI Auction: 31,505,898 Allowances
3rd RGGI Auction: 33,689,278 Allowances
4th RGGI Auction: 30,887,620 Allowances
Total Auctioned: 107 million Allowances
RGGI Derivatives Traded on CCFE: 369 million Allowances
160,000
140,000
25,000
RGGI Options Volume
20,000
120,000
100,000
80,000
60,000
RGGI Futures Volume
15,000
Avereage Daily Volume
10,000
40,000
20,000
-
5,000
Ju
ne
ay
M
Ap
ril
ar
ch
M
Fe
br
ua
ry
ry
Ja
nu
a
ec
em
be
r
D
N
ov
em
be
r
ct
ob
er
O
be
r
Se
pt
em
Au
gu
st
-
*As of 6/8/2009
© 2008
Chicago Climate Exchange®, Inc.
ACES
On June 26, the U.S. House of Represntatives passed the “American Clean Energy
and Security Act” by a vote of 219-212. If Enacted, ACES would establish an economy wide cap-and
trade program for greenhouse gases (GHGs) beginning in 2012.
Absolute Reduction Targets
•
3% by 2012 from 2005 level
•
17% by 2020 from 2005 level
•
42% by 2030 from 2005 level
•
83% by 2050 from 2005 level
Renewable Energy Standard (RES)
•
Electric utilities must meet 20% of electricity demand through renewable energy and energy
efficiency by 2020
Economy-Wide Coverage
•
2012: 67% of U.S. emissions covered
•
2014: 78% of U.S. emissions covered
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2016: 85% of U.S. emissions covered
Offsets
•
2 billion mt allowed per year
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1 of 2 billion mt for domestic offsets
•
1 of 2 billion mt for international offsets
© 2008
Chicago Climate Exchange®, Inc.
ACES Reduction Schedule
(Allowance Allocated)
© 2008
Chicago Climate Exchange®, Inc.
CCFE CFI®-US
Mandatory U.S. GHG Allowances
As of November 2008: CCX Carbon Financial Instruments with January 2013
expiration and later require delivery of U.S. Federal GHG Emission Allowances,
called CFI®-US
CFI®-US is the first tool for directly hedging economic exposure associated with:
• Whether a U.S. Federal Cap-and-Trade is established
• When such a U.S. Federal Cap-and-Trade is established
• The prices of tradable emission allowances established under such a
Federal Cap-and-Trade
11/19/08: First Trades
Futures contracts that expire in December 2013, 2014 and 2015 were traded with
prices ranging from $11.75 to $15.00 per metric ton
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© 2008 Reproduction or quotation of this material is expressly forbidden without the consent of the Author.
Chicago Climate Exchange®, Inc.
European Climate Exchange ™ (ECX)
• Launched by CCX April 2005, based in London
• U.K. FSA-regulated futures exchange
• Futures and Options on:
• European Union Allowances (EUAS)
• UN Certified Emission Reductions (CERs)
• Commands 90-99% of exchange traded futures and options
volume
• Traded over 5 billion metric tons to date
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© 2008 Reproduction or quotation of this material is expressly forbidden without the consent of the Author.
Chicago Climate Exchange®, Inc.
ECX Monthly Volumes (EUAs and CERs)
© 2008
Chicago Climate Exchange®, Inc.
ECX Open Interest
© 2008
Chicago Climate Exchange®, Inc.
CER/EUA Market Share
EUA Futures & Options: Exchange Volumes
April 2009
CER Futures & Options: Exchange Volumes
April 2009
EEX
0.3%
Nordpool EEX
2.4%
0.4%
Nordpool
Green Exchange 0.5%
0%
ECX / ICE
99%
© 2008
Bluenext
0.0%
ECX / ICE
97.3%
Chicago Climate Exchange®, Inc.
EUA/CER Historical Prices
© 2008
Chicago Climate Exchange®, Inc.
国际环境交易在中国正式启动
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© 2008
Chicago Climate Exchange®, Inc.
CCX Activities in China
May 2006: First Chinese Companies join CCX
August 2006: CSRC requests consultancy with CCX CEO for China Bond
Futures Market
July 2007: Guanghua School of Management invites Dr. Sandor invited to join
international advisory council
Fall 2007: MOST-UNDP invites CCX to consult on development of carbon
market to meet Millennium Development Goals
January 2008: CCX and CNPCAM sign MOU for JV in China
April 2008: China Quality Certification Center (CQC) becomes CCX accredited verifier
July 2008: CCX, CNPCAM, City of Tianjin form Tianjin Climate Exchange
September 2008: TCX Opening Ceremony at TCX HQ
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© 2008
Chicago Climate Exchange®, Inc.
Key Goals in 11th Five Year Plan
Sulfur Dioxide (SO2)
Reduce 10% below 2005 levels by 2010
Water Quality - Chemical Oxygen Demand (COD)
Reduce 10% below 2005 levels by 2010
Energy Intensity
Reduce 20% below 2005 levels by 2010
© 2008
Chicago Climate Exchange®, Inc.
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4
Tianjin Climate Exchange (TCX)
Joint Venture with:
• CNPC Asset Management
• City of Tianjin
• Chicago Climate Exchange (CCX)
Mission:
• Implement environmental goals of 11th Five Year Plan
• Address national and international emissions and energy management challenges,
• Improve environmental quality and seek balance between environmental/economic benefits
Official Sanction: Tianjin Climate Exchange (TCX) will implement the Binhai
Comprehensive Reform Plan, approved on March 13, 2008 by the State Council of
the People’s Republic of China (PRC) to establish an emissions trading market in
Tianjin Binhai New Area.
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© 2008 Reproduction or quotation of this material is expressly forbidden without the consent of the Author.
Chicago Climate Exchange®, Inc.
TCX Initial Product Areas
Sulfur Dioxide (SO2) Initial Product/Program Area
11 FYP: Reduce 10% below 2005 levels by 2010
Water Quality - COD – Initial Product/Program Area
11 FYP: Reduce 10% below 2005 levels by 2010
Energy Intensity - Initial Product/Program Area
11 FYP: Reduce 20% below 2005 levels by 2010
Voluntary GHGs
CDM CERs
© 2008
Chicago Climate Exchange®, Inc.
3
6
Tianjin Climate Exchange – Opening Ceremony
37
© 2008 Reproduction or quotation of this material is expressly forbidden without the consent of the Author.
Chicago Climate Exchange®, Inc.