RENEE MONTAGNE, host:
G8 leaders are gathering in Scotland today to discuss, among other things, climate control. The United States has rejected the international agreement on global warming known as the Kyoto Accord. Today, in Denmark, on a stopover on the way to the summit, President Bush acknowledged that global warming is a serious concern.
President GEORGE W. BUSH: 'Cause I recognize that the surface of the Earth is warmer and that an increase in greenhouse gases caused by humans is contributing to the problem.
MONTAGNE: For two years, some of America's biggest companies have engaged in one method of managing those greenhouse gases. At the Chicago Climate Exchange, companies buy and sell permission to pollute. NPR's Elizabeth Shogren reports.
ELIZABETH SHOGREN reporting:
From his office on the eighth floor of an elegant Chicago skyscraper, Richard Sandor can look straight down LaSalle Street to the Chicago Board of Trade, one of the world's busiest exchanges. In a former life, Sandor was the vice president and chief economist there. These days he's not focused on interest rates and derivatives but on methane and carbon dioxide.
Mr. RICHARD SANDOR: The carbon market has the potential to be the biggest commodity market in the world.
SHOGREN: But that's years in the future. For now, they're taking baby steps. The Chicago Climate Exchange is a collection of more than a hundred companies. They voluntarily signed a legally binding agreement to cut greenhouse gases 4 percent by next year. Members that cut pollution quicker sell their right to pollute to those who can't cut back as fast.
Mr. SANDOR: The idea is to find the least-cost way to reduce greenhouse gas emissions, and if Dow or DuPont can do it cheaper than I can, pay them to do it. It's no different than it's easier for me to pay the garbage company to take away the garbage than for me to haul it myself in the back of a pickup truck.
SHOGREN: It isn't just small green companies involved. Members include such corporate giants as IBM, DuPont, Motorola and American Electric Power, one of the country's largest electric utilities. Cities like Chicago and Oakland also joined. Sandor didn't set out to create a voluntary exchange. In 1999, when he took on the project, it looked like the United States would sign the Kyoto global warming protocol.
Mr. SANDOR: The big key to getting companies to sign on was there was coming regulation and they would get an early or a head start.
SHOGREN: But President Bush pulled the US out of Kyoto and declared that mandatory emission cuts would be too harmful for the US economy. So if companies don't have to participate, why do they? Sandor says it's easier to explain the seller's reasoning.
Mr. SANDOR: If you're a company like DuPont that has already cut emissions and is very proud of the fact, then they understand that that's in the shareholder's interest because they can sell the carbon and they can make money.
SHOGREN: The buyers often are multinational companies that face some greenhouse gas regulations already in their European operations. The Chicago Climate Exchange gives them experience in accounting for their emissions, in making trades, and, down the road, they hope they'll get credit for early action. Baxter Healthcare Corporation is a founding member of the exchange. Ron Meissen is the director of engineering.
Mr. RON MEISSEN (Baxter Healthcare Corporation): We believe that we're entering a carbon constrained world, and we see different governments, different regions, like the European Union, going to an emissions trading scheme, and so by participating on a voluntary basis with the Chicago Climate Exchange, we're involved and we are influencing the procedures, how it's done so it's more user friendly to other companies.
SHOGREN: Because the Climate Exchange is electronic, Meissen watches prices from the computer in his office and makes trades when he likes the price. His company has grown significantly, so Baxter has ended up buying rather than selling, but Paul Bledsoe of The National Commission on Energy Policy says the exchange has only minimal value.
Mr. PAUL BLEDSOE (The National Commission on Energy Policy): It's encouraging that some companies want to make voluntarily emissions reductions but almost everyone has come to the conclusion that only mandatory system will make the kind of emissions reductions that can help start to solve the problem.
SHOGREN: That may be most evident in the fledgling European Climate Exchange, which is wholly owned by the Chicago Climate Exchange. Because Europe signed Kyoto, cutting greenhouse emissions there is mandatory. On that exchange, carbon trades for about $30 a ton while the price in Chicago hovers around $1.80.
Elizabeth Shogren, NPR News, Washington.
MONTAGNE: This is MORNING EDITION from NPR News.
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