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The Quiet Death of a U.S. Carbon Market

The rise and recent fall of the Chicago Climate Exchange -- and the apathetic media coverage of its demise -- illustrates just how far the U.S. is from ever putting a cap on greenhouse gas emissions. In short, cap-and-trade in the U.S. is years away.

The Chicago Climate Exchange (CCX) can't exist without cap-and-trade legislation. Plain and simple. The CCX is a voluntary, but legally binding greenhouse gas emissions trading system. Companies have to meet reduction targets and those that come in below the cap can sell their surplus allowances, or even bank them for later. Members of the emissions trading scheme included Abbott (ABT), DuPont, Ford, Motorola (MOT) and Waste Management (WM).

Two years ago, cap-and-trade legislation in the U.S. appeared to be headed towards law. But after the House passed a climate change bill, the Senate dragged its feet when supporters realized it couldn't secure enough votes for the measure. The political will to move forward dropped by the wayside after the global climate change talks in Copenhagen failed to produce results. Soon after, Intercontinental Exchange Inc. (ICE) bought Climate Exchange plc, which operated the European, CCX and the Chicago Climate Futures exchanges in April for $600 million.

In the months since, and especially since a proposed U.S. climate bill dropped the cap-and-trade provision earlier this summer, activity on the exchange has come to a standstill, Reuters reported. Meanwhile, activity in the European exchange continues to grow because it adheres to the mandatory caps put in place by the Kyoto Protocol.

In early November, during Intercontinental Exchange's earnings conference call with investors, the company's CFO said it would cut 40 employees by the end of the year, with further cuts in 2011. A new registry program for 2011 and 2012 carbon offsets will be launched in the exchange's place, Greener World Media reported.

Mainstream media coverage of the cap-and-trade has slowed in recent months. And the climate exchange's demise barely received any coverage. The White House still mentions climate change on its website, but most of the emphasis is on building a clean energy economy, not capping emissions. The talk of cap-and-trade is no longer part of our everyday vernacular.

The most telling example of cap-and-trade's fall? Even its staunchest opponents have stopped talking about it. Instead, they're focused on debunking climate science itself.

Photo from TVA