Carbon Futures Platform to Shut; Offsets Near Record Lows

by | Aug 8, 2011

Financial markets firm Intercontinental Exchange Inc. is to shut its emissions derivatives trading platform, Chicago Climate Futures Exchange, by the end of the first quarter, the Wall Street Journal has reported.

ICE is closing the exchange as it is currently losing money and there is little chance of the government putting a federal carbon reduction plan in place, according to the Journal.

The financial firm bought Chicago Climate Futures Exchange’s parent company Climate Exchange PLC in 2010 for about $600 million, the Journal says. In late 2010, ICE announced that it would end the country’s only voluntary allowance-based carbon market, the Chicago Climate Exchange (CCX), continuing the CCX as an offset registry only.

In other news, carbon offsets came close to record lows Friday, cementing the commodity’s place as “the world’s worst performing,” Reuters reports.

As the global economy has slowed so has the amount of greenhouse gasses being pumped into the atmosphere. As a result the supply of carbon offsets has far outstripped demand, according to Reuters.

Oil, grains, natural gas and coal prices have also been affected by the economic downturn.

But carbon offsets have been particularly hard hit because a climate panel within the United Nations – the supplier of the financial instrument – has continued to print new offsets despite what Reuters calls “a widening glut” in emissions permits in the EU’s carbon market, the world’s major demand market.

Picture credit: Baer Tierkel

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