Chicago Climate Exchange

The CCX is being discontinued (as of 1/2011).

Details about what will happen to its offset program have not yet been released.
For a GHG Managment Institute blog post on the closure of CCX, go here.

www.chicagoclimateexchange.com


Overview
Market Size and Scope
Offset Project Eligibility
Additionality Requirements and Project Methodologies
Project Approval Process


Overview

Type of Standard and Context

The Chicago Climate Exchange was launched in 2003 as a voluntary greenhouse gas (GHG) emission cap and trade scheme located in North America. This page gives a short overview of the CCX cap and trade program but primarily focuses on its offset program.

Participation in the CCX cap and trade scheme was voluntary. Members could comply by either cutting their emissions internally, trading emission allowances with other CCX members, or purchasing offsets generated under the CCX offset program. There was a 50% limit on the use of offsets to meet compliance standards.

In the first phase of the scheme, from 2003 to 2006, CCX members agreed to cut their emissions by 1% each year below their annual average emissions for the period 1998 to 2001, thereby by achieving a reduction of 4% by the end of the fourth year. For the second phase from 2007 to 2010, the original members agreed to cut their emissions by an additional 0.5 % each year to achieve an overall target of 6% below 1998–2001 levels by 2010.

The program is being discontinued.

Standard Authority and Administrative Bodies

The CCX administrative structure included:

• Senior Management and staff responsible for the day-to-day administration of the CCX and its operations;

• A 12-member Committee on Offsets comprised of CCX members responsible for reviewing and approving proposed offset projects. Each member is appointed by the CCX Executive Committee for one year with the possibility of renewal;

• A Committee on Forestry comprised of CCX members responsible for the review of proposed forestry projects;

• A Regulatory Services Provider is responsible for auditing the baseline and annual emissions reports of CCX members, monitoring trading activity and reviewing verifiers’ reports for offset projects.

• Independent auditors called CCX Verifiers responsible for verifying a project’s annual GHG sequestration or destruction; (There are currently 29 approved auditors.)

• Technical Advisory Committees comprised of external experts, established at the request of the Committee on Offsets or on an ad-hoc basis by CCX administrators to assist in the development of rules for each offset type.

Regional Scope

Initially, CCX membership was limited to the US but was later opened to participants from other countries.

Recognition of Other Standards/ Linkage with Other Trading Systems

The CCX allowed trading of Clean Development Mechanism Certified Emission Reductions (CDM CERs) once the project has been approved by the CCX Committee on Offsets. The CERs must be retired in exchange for receiving the CCX’s tradable unit, the Carbon Financial Instrument (CFI).

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Market Size and Scope

Tradable Unit and Pricing Information

Carbon Financial Instruments (CFIs) were the tradable units of voluntary CO2e reductions under the CCX. One CFI is equivalent to 100 metric tons of CO2e. CFIs have been traded at an average price of USD 0.05 –USD 7.5 per metric ton of CO2e.

Participants/Buyers

In 2008, the CCX had nearly 400 members including companies such as the Ford Motor Company, American Electric Power, Sony Electronics and Bank of America; US state governments such as the State of New Mexico; and educational institutions such as Michigan State University.

Current Project Portfolio

As of January 2011, the CCX had registered approximately 84MmtCO2e in offsets from over 137 projects. (The latest information is available at http://www.chicagoclimateexchange.com/offsets/projectReport.jsf.)

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Offset Project Eligibility

Project Types

Project types that were eligible to register on the CCX:

• energy efficiency projects;
• fuel switching projects;
• renewable energy projects;
• methane capture coal mines, livestock operations and landfills;
• bio-sequestration through forestry and agricultural management practices; and
• destruction of ozone depleting substances.

Project Locations

Projects could not be located in EU-ETS member states or in other Annex B countries that have ratified the Kyoto Protocol.

Project Size

There is no limit on project size.

Start Date 

Projects that sell offsets on the CCX should not have started before January 1, 1999. However, the earliest start date for forestry projects is January 1, 1990 and for HFC destruction projects is January 1, 2007.

Crediting Period

Most of the eligible project types can earn offsets for the eight-year period 2003–2010. The exceptions include renewable energy projects, which can earn offsets from 2005 to 2010 (six years), HFC destruction projects, which can earn offsets from 2007 to 2010 (four years) and rangeland soil carbon projects, which can earn offsets from 2006 to 2010 (five years).

Co-benefit Objectives and Requirements

Offset projects must comply with the rules and regulations of the host country. Beyond this legal prerequisite, the CCX does not have requirements to ensure stakeholder involvement and other secondary benefits.

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Additionality Requirements and Project Methodologies

Additionality Requirements

The CCX required that offset projects were "recently implemented," "beyond regulation," and involve “rare/best in class” practices.

Project Methodologies

Some baselines are project-specific, including large reforestation projects which are credited relative to measured, site-specific carbon levels prior to the start of the project. Other baselines are quantified using performance standards, such as avoided deforestation projects in Brazil which use pre-determined annual deforestation rates for specific states in Brazil. .

Permanence

CCX rules address the permanence issues around forestry projects by requiring a commitment to the long-term maintenance of project carbon stocks, a carbon reserve pool equal to 20% of all offset credits issued for the project, and cancellation of reserve pool offsets in case of sequestration reversal. Offsets from the carbon reserve pool are released at end of five-year a crediting period.

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Project Approval Process

Validation and Registration

The CCX did not distinguish between validation and verification. Both steps were usually done at the same time and are called “project verification and enrollment”. The initial validation of projects was optional.

Monitoring, Verification and Certification

Verification of emission reduction was done annually and projects are subject to on-site inspections at any time for the duration of the project's enrollment with CCX. A CCX-approved third-party auditor had to verify an eligible project’s actual annual GHG emission reduction, sequestration or destruction and submits a Verification Statement to the CCX.

Registries and Fees

The CCX Registry is the electronic database that serves as the official record holder and transfer mechanism for CFI contracts. All CCX members have CCX Registry Accounts.

Fees for CCX membership were USD 1,000–60,000 per year, depending on the size and type of member. Offset registration fees were USD 0.12 per metric ton from non-Annex I countries and USD 0.15 per metric ton from Annex-I countries.

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