King County may join global warming credit exchange

Wed., May 17, 2006

Associated Press The Spokesman-Review

SEATTLE – Government leaders with “green” agendas hope to see King County become the first in the nation to join a national market for buying and selling credits to help curb global warming.

County executive Ron Sims is pushing for the county to join the Chicago Climate Exchange, a market in which the commodity is the reduction of greenhouse gases. He also pushed for a county government commitment to reduce its production of gases that aggravate climate change.

“Global warming … affects our economy, the way we live, the future and the future of our children,” county Councilman Larry Phillips said at a meeting with Sims on Monday. “King County has the chance to lead the way to effective solutions.”

The proposal would make King the first county to join the exchange, also called CCX.

It’s the only commodities market in North America in which the commodity is reductions in the so-called greenhouse gases – carbon dioxide, methane and others released by modern society – blamed for heating up the planet.

The market, established in 2003, requires member companies and governments to pledge a 6 percent reduction in greenhouse gases for the 10-year period that ends in 2010. If a member fails to meet its goal, it buys credit from a member that exceeded its required reductions.

Such a system helped reduce sulfur dioxide from power plants in the 1990s.

The climate-exchange credits don’t cost very much – at least not yet. And there’s no federal requirement for all companies and governments to reduce greenhouse gas production, as there was for sulfur dioxide, so the market is voluntary.

On Monday, the price to make up for emitting a metric ton of greenhouse gases was $3.70.

In Europe, where reductions are mandated, the price has been in the high $30s, said Madison Hall, a longtime commodities trader who is studying the CCX concept as a graduate student at Michigan State.

Many CCX members anticipate that the federal government eventually will mandate cutbacks.

“The first to the market is rewarded,” Hall said. “If you’re the first to create this relationship, to show goodwill, to educate your vendors, to educate your shareholders, people see that you are ahead of the risk.”

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