Green Exchange to Trade Carbon Credits

A new financial exchange is opening on Wall Street. It won't trade stocks. It'll trade carbon credits and other environmental offsets that help in the fight against global warming. This new Wall Street-backed Green Exchange could be a big step forward for the U.S.

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RENEE MONTAGNE, host:

As banks assess the red ink spilling from the mortgage crisis, they're also trying to go green. A new financial exchange is opening on Wall Street. It won't trade stocks; it will trade carbon credits.

NPR's Chris Arnold reports.

CHIRS ARNOLD: It's called the Green Exchange. It's backed by the New York Mercantile Exchange, Morgan Stanley, and a group of other companies, some of which are already backing environmental clean-up projects around the world.

Andy Ertel is the CEO of Evolution Markets.

Mr. ANDY ERTEL (Evolution Markets): One of the interesting projects that we've done has been a financing of a methane-capture system in Argentina, to actually install a network of pipes to collect landfill gas; it's a very potent greenhouse gas.

ARNOLD: So companies in France paid for the project in exchange for the greenhouse gas credits from the methane facility. They could then sell those credits, say to factories or power plants that need to meet emissions requirements.

Mr. ERTEL: This ended up, you know, being a project that would not have happened without emissions trading.

ARNOLD: Europe is farther along than the U.S. in all this. There's already one exchange in Chicago. But Ertel and others say this new Wall Street-backed Green Exchange could be a big step forward for the U.S.

David Victor is a Stanford Law School professor who studies emissions credit markets.

Professor DAVID VICTOR (Stanford Law School): It's a signal that the United States is starting to get serious about controlling its emissions, and traders and companies believe that's true.

ARNOLD: Still, Victor says a major stumbling block is insuring that the money spent on credits actually results in lower emissions. He says, for example, some developing countries are getting carbon-credit money for wind farm electricity projects that they most likely would've done anyway.

Chris Arnold, NPR News.

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