NEW YORK (Reuters) - Evolution Markets, an environmental products and energy brokerage, said on Wednesday it was combining with the New York Mercantile Exchange to offer trade in the United States next year in global carbon credits.
The bourse, to be called the Green Exchange, will begin trade during the first quarter and will be regulated by the U.S. Commodities Future Trading Commission through the NYMEX.
Green Exchange will list contracts for the billion-dollar U.N. carbon credit market, including Certified Emissions Reductions. It will also list voluntary emissions reductions credits, a market that has grown to about $100 million, mostly in the United States.
The United States is the only developed country in the world that has not ratified the Kyoto Protocol, a global agreement that seeks to cut greenhouse gas emissions. The pact spurred Europe to launch a greenhouse emissions market in 2005.
But leaders in the U.S. Congress and candidates from both parties in the 2008 U.S. presidential campaign favor regulating the gases blamed for global warming. Bills being mulled would set up market mechanisms to try to bring the power of capitalism to tackle the emissions.
Green Exchange, a stand-alone company, will list products on the CME Group Globex platform, which will be cleared through the NYMEX clearing house.
Evolution said the new bourse gives energy traders on the NYMEX, the world’s biggest energy exchange, easy access to trading environmental products.
“If you are trading oil and natural gas on the NYMEX, you won’t have to set up a different clearing account to trade these environmental products,” Evan Ard, a spokesman for Evolution Markets, said in an interview.
Peter Fusaro, a carbon market expert at Global Change Associates in New York, said the exchange will be the first time an emissions bourse brings together all the potential players looking to trade greenhouse credits.
Green Exchange will bring together traders for oil, power and gas companies — the largest greenhouse gas polluters — and agriculture and financial futures traders and bilateral traders, or ones that are not members of the exchange but clear deals through it, he said. Bilateral deals make up 65 percent of emissions deals in Europe, he added.
“NYMEX is very strong in the energy sector, and not as well known in the environmental sector, so I think you’ve now married the two,” he said.
The Green Exchange will compete with the Chicago Climate Exchange, the first U.S. bourse to trade carbon credits. CCX is a voluntary bourse in which members pledge to cut greenhouse emissions by a certain amount and time.
Ard said Green Exchange would be broader than CCX because it will offer more contracts, and through NYMEX, offer more players to trade contracts.
The Green Exchange will also offer contracts for emissions that cause smog and acid rain, as well as for renewable energy credits, Ard said.
Morgan Stanley, JP Morgan, Credit Suisse, Merrill Lynch Constellation, Tudor Investments and ICAP will also be partners in Green Exchange, Evolution Markets said.
Editing by Walter Bagley