The closing this week of the Chicago Climate Exchange, which was envisioned to be the key player in the trillion-dollar “cap and trade” market, was the final nail in the coffin of the Obama administration’s effort to pass the controversial program meant to combat global warming. “Economy-wide cap and trade died of what amounts to natural causes in Washington,” said Fred Krupp, president of the Environmental Defense Fund, which had supported the plan. The CCX was set up in 2000 in anticipation of the United States joining Europe and other countries around the world to create a market that would reduce the emission of greenhouse gases.
Under the system, factories, utilities and other businesses would be given an emissions target. Those that emitted less fewer regulated gases than their target could sell the “excess” to someone who was above target. Each year, the target figures would be reset lower. The Exchange was the brainchild of Richard Sandor, an economist and professor at Northwestern University, and it was modeled after a successful program that was launched in 1990 and helped control acid rain in the Midwest. It was initially funded by a $1.1 million grant from the Joyce Foundation of Chicago, and President Obama was a board member at the time. After the Democrats won the White House, the House and the Senate in 2008, businesses and investors flocked to the exchange, believing Congress would quickly approve the program. And it almost happened. The House of Representatives passed a bill proposed by Democratic Reps. Henry Waxman of California and Ed Markey of Massachusetts, which would have made cap and trade law. But the Senate couldn’t muster the votes, and everything went downhill from there. In the last week, following the Nov. 2 Republican takeover of the House of Representatives, the slide became an avalanche. Investors in CCX, including Sandor and former Vice President Al Gore, sold the exchange to a company involved in commodities trading. Sale records show that Sandor cleared more than $90 million for his 16 percent stake in the company. Meanwhile, the White House has dropped all references to cap and trade from its web site; and, unlike the heralded climate summit in Copenhagen last year, a 10-day meeting in Mexico beginning Nov. 29 on the next steps to battle global warming has not even mentioned publicly by the administration.