Green Exchange Plans California Carbon Futures Market

The Green Exchange said Monday it will launch a futures market tied to California's planned program for limiting emissions, as a range of markets target what would be the biggest so-called cap-and-trade system in North America.

Contracts linked to California carbon allowances are expected to begin trading Sept. 11, according to the company, owned by a consortium of Wall Street banks, climate brokerages and CME Group Inc. (CME).

The push to list derivatives on the price of carbon comes after California last month delayed its cap-and-trade system one year, now seen launching in 2013, following a legal dispute challenging the plan's effectiveness in curbing pollution.

California has come front and center for exchanges and brokers that long have eyed the ascendance of carbon as a new class of tradable commodity, after hopes for a federal program died and progress in other regional efforts has been slow.

IntercontinentalExchange Inc. (ICE), operator of the world's largest carbon markets franchise in the European Climate Exchange, has viewed California's plan as a fresh start, after a voluntary program run through the Chicago Climate Exchange came to an end. NYSE Euronext (NYX), which has revamped its French carbon-trading venture Bluenext, is also developing a California strategy.

The Green Exchange's planned contracts will initially offer annual expirations tied to the anticipated price of carbon in December 2012, 2013 and 2014. Each contract will represent 1,000 tons of carbon dioxide.

"This will allow people to make investment decisions, be it in offset projects, emissions reductions within their own facilities, or in the purchase of energy or other raw materials," said John Melby, San Diego-based managing director for the Green Exchange.

The firm is also considering contracts linked to emissions offset projects, though issues related to buyers' liability still need to be worked out at the state level, Melby said.

-By Jacob Bunge, Dow Jones Newswires; 312 750 4117; jacob.bunge@dowjones.com

--Cassandra Sweet contributed to this article.

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