Community Carbon Exchange?

The Chicago Climate Exchange is a non-Kyoto trading platform for carbon credits generated in the United States. It is a voluntary exchange, but once signed on the participation and carbon reduction committment is legally binding.

My question is, can this same model be applied on a small geographic basis? How well does this exchange concept scale down? Can it be used to create a business case for carbon reduction at a local level? Could a local exchange be set up that would allow carbon credits to be traded by local businesses and individuals?

Comments

[Joel Woodhull]

The last paragraphs in the Background section of the Chicago Climate Exchange reference say:
"It is clear that the demand to reduce greenhouse gases will grow over time. Taking action to limit greenhouse gas emissions and create value for these reductions makes good business sense. However, these emerging markets, and an international market linking them, are still in their infancy. This results in large transaction costs and market inefficiencies. Examples of barriers to trading are:
• regulatory uncertainty;
• lack of a clear, widely-accepted definition of the commodity;
• lack of standards for monitoring, verification, and trade documentation;
• lack of standards for eligibility of project-based emission offsets; and
• lack of organized markets and clear market prices.

It was against this background, and to address these problems, that the Chicago Climate Exchange has been established."

If these barriers exist at the scale where cap-and-trade systems seem most promising, they are likely to be far more formidable at the local level.

In concept at least, we've defined a commodity as vehicle miles or VMT, which is closely related to the GHGs generated by travel. The commodity cap would be the total annual vehicle miles to be permitted in Sonoma County. Rather than have the trading units be individual travelers or households, which seems quite cumbersome, they would be the political units making up Sonoma County. Each city generates VMT, and their officials make decisions that either encourage or discourage VMT, so such a cap-and-trade system would function so as to reduce overall VMT.

Joel Woodhull

[Dave at CPC]

Joel, I wonder what you think of the idea of using an online auction such as Ebay as an intermediate step. Rather than involving the governments, this would be a system that would allow individuals to buy and sell rides. This system would combine the auction capability with a scheduling/routing mechanism that would enable buyers of rides to connect with sellers who are going to the same place, at the same time. It would allow a rider to get a reasonable price on a ride by creating a market for rides. It would also allow drivers on popular routes to get a reasonable price for a seat in the car.