Frequently Asked Questions

1) What are the goals of the Chicago Climate Exchange?

To facilitate the transaction of GHG allowance trading with price transparency, design excellence and environmental integrity
To build the skills and institutions needed to cost-effectively manage GHGs
To facilitate capacity-building in both public and private sectors to facilitate GHG mitigation
To strengthen the intellectual framework required for cost effective and valid GHG reduction
To help inform the public debate on managing the risk of global climate change

2) What are the benefits of joining?

Be prepared: mitigate financial, operational and reputational risks
Reduce emissions using the highest compliance standards with third party verification
Prove concrete action on climate change to shareholders, rating agencies, customers and citizens
Establish a cost-effective, turnkey emissions management system
Drive policy developments based on practical, hands-on experience
Gain leadership recognition for taking early, credible and binding action to address climate change
Establish early track record in reductions and experience with growing carbon and GHG market

3) What is the CCX Emissions Baseline?

The CCX Emissions Baseline is the Member's average emissions during the 1998 through 2001 period (the Phase II Baseline may be the single year 2000). Each CCX Member is issued emission allowances equal to its emission reduction target in accordance with the CCX Emission Reduction Schedule.

4) What are the emission reduction targets?

In Phase I, Members committed to reduce emissions a minimum of 1% per year, for a total reduction of 4% below Baseline. In Phase II, CCX Members commit to a reduction schedule that requires year 2010 emission reductions of 6% below Baseline at minimum.

5) What emissions are included?

All CCX emitting Members must include all direct emissions and may opt-in indirect emissions. Direct emissions result from the on-site combustion of fossil fuels, such as natural gas to power industrial operations and gasoline to operate vehicle fleets. Indirect emissions result from energy purchases, such as electricity, and their corresponding emissions. Once opted out, indirect emissions may not be opted in and vice-versa.

6) How are emissions monitored and reported?

Emissions are quantified using continuous emission monitors (when available), or through use protocols developed by CCX and those developed by the World Resources Institute/World Business Council for Sustainable Development initiative. Emissions are reported annually, and are subject to external audit and verification by FINRA.

7) How are trades executed and registered?

All trades occur on the Internet-based CCX Electronic Trading Platform, and are linked directly with the CCX Registry. The Registry is comprised of Member accounts and is the official holder of record and transfer mechanism for the CCX.

8) What is the governance structure of CCX?

Standing Committees comprised of CCX Members provide oversight of specific market functions. Committees include the Executive Committee, Environmental Compliance Committee, Trading and Market Operations Committee, Offsets Committee, Membership Committee and Forestry Committee.

9) What is a greenhouse gas and what does it have to do with global warming?

The "greenhouse effect" refers to the temperature regulation effect that certain atmospheric gases have on the earth. The temperature-regulating gases, called "greenhouse gases" or GHGs, form a blanket around the earth that traps some heat from the sun within the earth's atmosphere, keeping the planet warm and habitable. "Global warming," or climate change, can occur when the blanket of GHGs gets thicker. Climate models from the Intergovernmental Panel on Climate Change, as well as models from other scientific bodies, indicate that global concentrations of GHGs have been rising steadily over the past 100 years. As atmospheric concentrations of GHGs increase, the greenhouse blanket gets thicker. This cause heat to be trapped in the lower layers of the atmosphere and may cause global average temperatures to rise. Implementation of the Chicago Climate Exchange helps to build and test the institutions and skills needed to cost-effectively manage GHGs.

10) What is cap and trade and how can it help reduce emissions?

A cap-and-trade emission trading system is successful from both environmental and economic viewpoints because:

It relies on a stipulated environmental goal—an emissions limit, or cap. Direct monitoring of emissions is used to verify that the cap is achieved so as to insure the value of the tradable allowances.
It provides emitters with the flexibility to apply the least-cost emission reductions sooner than they might otherwise.
It provides direct financial incentives for new low-cost control technology and other approaches to reduce emissions.
Banking and sale of allowances provides an incentive to make larger than required reductions in a given time period.
It establishes a price signal to help minimize waste of scarce resources.

11) What gets traded?

The tradable contract at CCX is the Carbon Financial Instrument® (CFI®). CFI contracts are comprised of Exchange Allowances and Exchange Offsets. Allowances are issued to emitting Members in accordance with their Baseline and the CCX Emission Reduction Schedule. Offsets are generated by qualifying offset projects. One CFI contract is equal to 100 metric tons of CO₂e.

12) What is FINRA and what does it do?

FINRA is the Financial Industry Regulatory Authority (formerly NASD). FINRA verifies Member Baselines and annual emissions and utilizes state of the art market surveillance technology to monitor CCX trading activity against fraud and manipulation. FINRA also reviews offset verification reports for completeness.

13) What are Membership costs?

Annual fees depend on baseline level of emissions and includes the FINRA audit. An enrollment fee is also charged at entry.

14) Who is eligible to trade on the CCX Trading Platform?

As an Exempt Commercial Market, CCX Members that will be entering into transactions on the CCX Trading Platform must qualify as an Eligible Commercial Entity as defined in Section 1a(11) of the Commodity Exchange Act.

15) What is CCX's relationship to public policy?

CCX is an implementation platform for public policy and is synergistic with and complementary to all emerging local, state, regional and U.S. national policy on climate change.

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