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Carbon Contracts Launched on The Green Exchange

Burlington, Ontario, 26-February-2008 - Contracts for trading carbon dioxide emissions through The Green Exchange will be introduced by the New York Mercantile Exchange, the world’s largest energy market, next month.

Nymex has said that it will launch the first future and options contracts on March 16 for trading the following day. The contracts will form part of its Green Exchange initiative.

Initial contracts will be European Union Allowance (EUA) futures and options and Certified Emission Reduction (CER) futures.

CERs are issued for greenhouse gas emission reductions from Clean Development Mechanism project activities, as defined by the Kyoto Protocol.1 EUAs are greenhouse gas emission allowances tradable within the European Union Emission Trading Scheme (EU-ETS).2

The tripling of global trade in emissions credits to US $30 million last year provided the impetus for The Green Exchange. With increased restrictions on carbon dioxide pollution from power plants and refineries in Europe, companies were driven to buy permits. In the U.S., twenty-two states are exploring mandatory carbon caps and emission credit markets similar to the EU.

The futures contracts will be available for trading on the CME Globex(R) electronic trading platform, the options contracts will be available for trading on the NYMEX trading floor, and all contracts will be available for clearing on NYMEX ClearPort(R).

The EUA futures contract and CER futures contract will be physically delivered at the UK Emissions Trading Registry. The contract size will be 1,000 metric tons of CO2, the equivalent of 1,000 EUA units, and the minimum price fluctuation will be euro 0.01 per unit. The EUA options contract will be a European-style option that will exercise into the underlying EUA futures contract. Nymex will apply for Commodity Futures Trading Commission certification with its trades cleared by Nymex.

Nymex has credited JPMorgan Chase & Co., Morgan Stanley, Tudor Investment Corp., and Evolutions Markets Inc. as partners in The Green Exchange. Developed with utilities, emissions brokers and investment banks, The Green Exchange will create contracts with uniform standards.

Energy Advantage continues to monitor the development of The Green Exchange and will advise further on the progression of this market.


1Glossary of climate change acronyms. UNFCCC. http://unfccc.int/essential_background/glossary/items/3666.php
2Emission Trading Scheme (EU ETS). EUROPA. http://ec.europa.eu/environment/climat/emission.htm