March 24, 2008
Proposed launch date for trading of CO2e futures in Canada
Alix d'Anglejan-Chatillon and Jason Streicher
The Montreal Climate Exchange (MCeX) recently announced that, subject to regulatory approval, on May 30, 2008 it plans to launch trading of its first environmental product, namely futures contracts on Canada carbon dioxide equivalent (CO2e) units. The MCeX set the launch date after the federal government's March 10, 2008 release of further details of its greenhouse gas emissions regulations.
It is expected that the emissions reductions credits and offset credits under the federal government's proposed greenhouse gas regulatory scheme will be the two sources for futures contracts on Canada CO2e units. Units of each of these two types of domestic credits (which will represent an equivalent emission of one metric tonne of CO2e) will be the underlying interest of the CO2e futures contracts traded on the MCeX.
The MCeX was created in 2006 through a joint venture between Montreal Exchange and the Chicago Climate Exchange. The MCeX aims to become the leading market for publicly-traded environmental products in Canada. In October 2007, the MCeX filed an application with its lead regulator, the Autorité des marchés financiers (AMF), requesting approval of market rules designed to govern the trading of MCeX environmental products on its electronic trading platform SOLA®. A decision on its AMF application is expected in the near future.
The MCeX has cited World Bank estimates to the effect that the world market for carbon amounts to about US$100 billion and that trading activity on public carbon markets has grown rapidly in recent years to reach US$30 billion in 2006.
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