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CCX MARKET REPORT ® VOLUME 5, NUMBER 2

February 2008

CCX Carbon Market Data


In This Edition:
February 2008 Trading Summary • Abbott Laboratories Joins CCX
• CCX Member Companies Named Top Corporate Citizens by CRO
CCX® Sets New Record for Trading Day Volume • Michigan State and University of Iowa Partner to Transact Carbon Credits
Chicago Climate Exchange, Inc. (CCX®) announced that it achieved a • US Carbon Market Predicted to Exceed $1 Trillion by 2020
new record for trading day volume with 24,390 Carbon Financial •CCFE Launches CFI Options Contracts
Instrument® (CFI™) contracts transacted or 2.44 million metric tons •ECX to launch CER trading on March 14th
CO2, making February 11, 2008 the busiest trading day in the history • Most EU Countries Miss CO2 Allowance Issuance Deadline
of CCX. Trading occurred in all vintages from 2003 through 2010. • EU-27 emissions fall 0.7% in 2005

CFI® Prices and Volumes Soar in February


During February CCX saw record volumes combined with a signifi-
cant increase in CFI contract prices. Trading volume for the month February 2008 CCX CFI Price and Volume
surpassed 10 million metric tons of CO2, shattering the previous (2003 & 2008 vintages)
monthly volume record set in February 2007 which saw 3.7 million
Price (US$/metric ton), Volume (metric tons) Figure 1
metric tons CO2 traded. CCX year-to-date volume is over 11.34
million metric tons compared to 22.9 million tons for the entire year
2007. February’s record volumes translate into a 651% increase in $4.75 2,400,000
volume from the previous month. February also set the top five days $4.50 2,200,000
with highest daily trading volume in CCX history. 2,000,000
$4.25 1,800,000
$4.00 1,600,000
Along with increased volumes, CCX CFI contract prices also in-
creased significantly during February. CFI prices rose from $2.45 per $3.75 1,400,000
1,200,000
metric ton at the end of January to $4.50 per metric ton on February $3.50 1,000,000
29, 2008. February prices averaged $4.14 per metric ton with a range $3.25 800,000
of $2.60 to $4.60. 600,000
$3.00
400,000
$2.75 200,000
CCX Trading Activity $2.50 0
February 2008 Table 1
1
5

7
11
13

15
19
21
25

27
29
2/
2/

2/
2/
2/

2/
2/
2/
2/

2/
2/
VOLUME CLOSING PRICES To tal Volume 2008 Vintage 2003 Vintage
(metric tons) ($ per metric ton)
CCX market data and news: www.chicagoclimateexchange.com
Program to
CFI Contract Feb. ‘08 Jan. 31 ‘08 Feb. 29 ‘08
Date
2003 Vintage 926,800 5,088,500 $2.45 $4.50

2004 Vintage 1,054,100 6,051,000 $2.45 $4.45 February 2008 Carbon News
2005 Vintage 1,169,300 7,334,700 $2.45 $4.45
U.S. News
2006 Vintage 1,920,500 9,074,000 $2.45 $4.45
Abbott Laboratories Joins CCX
2007 Vintage 1,618,000 7,951,200 $2.45 $4.50 Abbott Laboratories, a leading healthcare company, joined
2008 Vintage 754,100 3,767,700 $2.45 $4.50 CCX and committed to the CCX GHG reduction and trading
program. In 2007, Abbott became the first FORTUNE 500
2009 Vintage 978,000 4,105,500 $2.45 $4.50 Company to commit to going carbon neutral for its U.S. fleet
2010 Vintage 1,628,800 4,955,100 $2.45 $4.50 of vehicles. Abbott has also installed a 500 kilowatt solar panel
in its facility in South California capable of powering more than
Total 10,049,600 48,327,700 100 homes for a year. Abbott employs 65,000 people and mar-
kets its products to more than 130 countries.
The figures above represent all trades posted to the CCX trading platform.

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CCX MARKET REPORT ® VOLUME 5, NUMBER 2
February 2008

February 2008 Carbon News Energy & Emissions Market News


US News cont’d Natural gas spot prices increased in the final week of the month as
CCX Member Companies Named Top Corporate Citizens by CRO space-heating demand remained strong across large population cen-
Thirteen CCX Members, including American Electric Power, Alle- ters in the Midwest and Northeast. Continued cold temperatures and
gheny Energy, Bank of America, Baxter, Ford, IBM, Intel, MeadWest- increased crude oil prices, which rose to more than $100 per barrel
vaco, Motorola, Reliant Energy, Safeway, Temple-Inland and Waste on February 20 contributed to increases in natural gas prices. On
Management, were named among the 100 Best Corporate Citizens February 20 spot prices at the Henry Hub increased by $0.73 per
for 2008 by Corporate Responsibility Officer Magazine. Motorola mmbtu to $9.08. This is the highest spot price at the Henry Hub in
topped the category under climate change. IBM and Motorola fea- over a year (since February 5, 2007, when the price reached $9.10
tured among 21 corporations that were named in top 100 list for per mmbtu) and 72% higher than its recent low of $5.29 on Septem-
2007 as well. ber 4, 2007.

Michigan State and University of Iowa Partner to Transact Carbon Credits According to the EIA, U.S. coal production is estimated to have fallen
Michigan State University and University of Iowa have agreed to a by 1.3% in 2007. Projected weak demand for coal in 2008 will result
transaction of 5,000 CO2 metric tons through the CCX program. in an additional 0.1% decline in coal production followed by a further
The purchase of credits will allow MSU to meet its CO2 reduction 0.8% decline in 2009. In the Western region, coal production is ex-
obligation under the CCX program and marks an innovative partner- pected to increase by 0.4% in 2008, but decrease by 1.4% in
ship between two public universities. 2009. Total coal stocks are estimated to have grown by 4.8% in 2007
to 196 million short tons. Total coal stocks are expected to fall by
US Carbon Market Predicted to Exceed $1 Trillion by 2020 0.6% in 2008.
Analysts at New Carbon Finance expect that the US carbon market
could grow to a value of $1 trillion based on expectations that a man- WTI crude oil prices, which averaged $72.32 per barrel in 2007, are
datory cap-and-trade scheme will be developed by the US govern- projected by the EIA to average $86.46 and $81.67 per barrel in 2008
ment within a five year time frame. and 2009 respectively. Regular grade gasoline prices, which averaged
$2.81 per gallon in 2007, are projected to average $3.07 and $2.97
CCFE Launches CFI Options Contracts per gallon, respectively, in 2008 and 2009.
Chicago Climate Futures Exchange launched CFI Options Contracts
on February 29, providing market participants a full suite of risk hedg- According to recent estimates by the EIA,, the number of cooling
ing tools in the CCX GHG emissions market. As of March 5 implied degree days in summer 2008 is projected to be about 10 percent
volatility for a call is 60% while implied volatility for a put is 43%. lower than they were last year. Lower power demand is therefore
projected, lowering growth in residential electricity sales this summer.
Total electricity consumption is expected to grow by only 0.4 percent
Global Carbon Market News in 2008 however returning to growth rates of 1.6 percent in 2009.
ECX to Launch CER trading on March 14th
The European Climate Exchange® (ECX) will launch futures trading
Energy Prices Table 2
for UN-regulated Certified Emission Reductions (CERs) futures on
March 14th. The Euro-denominated contracts representing 1,000 CER NATURAL GAS
credits will be physically deliverable in the UK registry. The first trad- & OIL JAN ’08 FEB ’08 AVG. % FEB 29 ’08
able contract will be for December 2008 delivery, followed by quar- FRONT MONTH AVG. CLOSE AVG. CLOSE CHANGE CLOSE
terly delivery dates – March, June, September and December. CONTRACT

Most EU Countries Miss CO2 Allowance Issuance Deadline Henry Hub Nat
$7.99 $8.64 +8.1% $9.37
Austria and Denmark were the only two EU countries to issue CO2 Gas
allowances to regulated companies in time to meet the annual Feb 28
deadline. Austria issued approximately 29 million allowances while WTI Light Sweet
Denmark issued 24 million allowances. The largely missed deadline Crude
$92.93 $95.35 +2.6% $101.84
resulted in few allowances being available for spot trading in the EU
ETS. Source: WTRG Economics

EU-27 Emissions Fall 0.7% in 2005


Greenhouse gas emissions in the EU 27 (excluding land use and land
use change) totaled 5.18 billion metric tons CO2 in 2005, down 0.7%
from the previous year, according to EU data. Of the total, 4.19 bil-
lion metric tons were emitted by the EU-15.

CHICAGO CLIMATE EXCHANGE ®


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CCX MARKET REPORT
® VOLUME 5, NUMBER 2
February 2008

CCFE™ February 2008 Market Data


During the month of February, 28,373 Sulfur Financial Instrument® (SFI™) futures contracts traded on Chicago Climate Futures
Exchange®, making it the second-highest month on record after January 2008. A total of 58,068 CCFE SFI futures contracts, repre-
senting 1.5 million tons of sulfur dioxide, have traded on CCFE thus far in 2008. This represents a year-over-year increase of 200%
from 2007 and 37,606% from 2006. 11,530 SFI options contracts also traded during February.

Carbon Financial Instrument® (CFI®) Futures on CCX carbon and Nitrogen Financial Instrument™ (NFI™) experienced record
months in trading volume during February. 1,391 CFI Futures contracts traded during February (representing 1.4 million metric
tons of CO2 equivalent). Records for daily traded volume in the CFI futures contract were set on February 14 with 231contracts
traded, and 221 contracts traded on February 6. In addition, 400 Nitrogen Financial Instruments™ (Annual) traded in February,
representing more volume than total prior trading volume since the contract launched. See Table 3.

CCFE launched options on CCFE CFI futures on February 29. This is the third options contract on CCFE and will provide market
participants with increased flexibility to hedge against price risks for CFI’s. 550 CFI options contracts traded on February 29. See
Table 4.

CCFE Futures™ Table 3

MONTHLY VOLUMES YEAR-TO-DATE VOLUMES MONTH END OPEN INTEREST

Contract Feb-08 Jan-08 %∆ Jan-Feb 2008 Jan–Feb 2007 %∆ Feb-08 Jan-08 %∆

CER 1 22 -95% 23 Not listed Not listed 108 108 0%

CFI® 1,391 798 74% 2,189 Not listed Not listed 2,187 2,039 7%

ECFI™ 29 5 480% 34 Not listed Not listed 39 40 -3%

ECO-Index 95 618 -85% 713 Not listed Not listed 73 34 115%

IFEX™ 200 1,510 -87% 1,710 Not listed Not listed 3,014 2,914 3%

NFI™-OS 10 2 400% 12 52 -77% 12 12 0%

NFI™-A 400 0 NA 400 Not listed Not listed 505 105 381%

SFI™ 28,373 29,695 -4% 58,068 19,348 200% 22,011 16,217 67%

Futures Totals 30,499 32,650 -7% 63,149 19,400 226% 27,949 18,469 51%

CCFE™ Options Table 4

MONTHLY VOLUMES YEAR-TO-DATE VOLUMES MONTH END OPEN INTEREST

Contract Feb-08 Jan-08 %∆ Jan-Feb 2008 Jan –Feb2007 %∆ Feb-08 Jan-08 %∆

CER 1 0 0% 2 Not listed Not listed 1 1 0%

SFI™ 11,530 22,700 -49% 34,230 Not listed Not listed 37,440 31,300 17%

CFI 550 Not listed Not listed 550 Not listed Not listed 0 Not listed -

Totals 12,081 22701 -47% 34,782 Not listed Not listed 36,641 31301 17%

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190 SOUTH LASALLE STREET, SUITE 1100 | CHICAGO, IL 60603 | PHONE: 312.554.3350 | WWW.THECCX.COM
CCX MARKET REPORT
® VOLUME 5, NUMBER 2
February 2008

European Climate Exchange® February 2008 Market Data


February 2008 marked the second highest volume month on record for the European Climate Exchange (ECX®). Nearly 140 mil-
lion metric tons CO2 traded on ECX, representing an increase of 122% over February 2007 volume. Futures represented 84% and
options represented16% of all transactions on ECX. Average daily futures and options volume equaled 6 million metric tons CO2.
Futures open interest at the close of the month was 148 million metric tons CO2, options open interest at 60 million metric tons
CO2 (40 million metric tons CO2 for calls and 20 million metric tons CO2 for puts).

Two new emissions members joined ECX this month: Klima Invest A/S and Susquehanna International Group (SIG).

ECX will launch trading of UN-regulated Certified Emissions Reduction (CER) futures on March 14th. ECX will launch a total of 17
CER contracts including futures and multiple options expiration dates. The Euro-denominated contracts representing 1,000 CER
credits will be physically deliverable in the UK registry. The launch comes after ECX and LCH.Clearnet, its clearing house, came to
an agreement regarding the launch of UN carbon credits on its electronic exchange. ECX Chief Executive Patrick Birley said: “We
are delighted that all outstanding issues have been resolved and we look forward to the imminent launch of ECX CERs. We have
seen strong demand from the market for products based on CERs, which will trade alongside our successful ECX EUAs futures
and options, and we believe that liquidity will develop rapidly.”

More information on ECX CER futures can be found at: http://www.europeanclimateexchange.com

ECX® CFI Futures and Options

Monthly Monthly
Contract Month End Avg Implied Total Volume Open Interest
Traded High Traded Low %∆ %∆
Month Settlement (€) Volatility (%) (Lots)2 (Lots)
(€) (€)

Mar-08 Futures 0.01 0.01 0.01 -0.01 -50% 156 205


Options 0.05% - -
Dec-08 Futures 22.10 18.95 21.31 +2.21 +11.6% 97,426 75,361
Options 49.52% 17,930 50,005
Dec-09 Futures 22.50 19.32 21.83 +2.26 +11.5% 9,494 31,570
Options 49.39% 3,950 9,415
Dec-10 Futures 23.00 19.82 22.51 +2.41 +12.0% 5,452 15,024
Options 48.72% 500 565
Dec-11 Futures 23.60 21.00 23.21 +2.46 +11.9% 3030 9,052
Options 48.26% - 65
Dec-12 Futures 24.59 21.42 24.15 +2.49 +11.5% 1,935 16,910
Options 47.83% - 65
Totals Futures 117,493 148,122
Options 22,380 60,115
ADV3 Futures 5,595
Options 1,066
2
Once ECX lot/contract = 1000 EU Allowances
3
ADV = Average Daily Volume

CHICAGO CLIMATE EXCHANGE ®


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