In 1997 parties from around the globe met in Kyoto Japan for a third Conference of Parties (COP 3) as part of United Nations Framework Convention on Climate Change (UNFCCC) to discuss climate protection. A pledge was made by United States to reduce greenhouse gas emissions 7% below 1990 levels by 2010.
In tandem with the efforts to reduce GHG emissions, COP 3 first introduced carbon trading via a cap-and–trade system. This system allows parties participating in a carbon market to trade emissions via allowances. Participants may purchase allowances which enable them to produce a predefined quantity of emissions.
However, following the Kyoto Protocol, the U.S. Senate failed to ratify the international accord, leaving the U.S. without a national carbon market. President George Bush proceeded to denounce the pact in 2001. Several years would pass before an economist created the U.S.’s first cap-and-trade market.
While climate activists were searching for an alternative to the Kyoto Protocol in the U.S., an economist Dr. Richard Sandor, along with his team, created Chicago Climate Exchange (CCX) in 2003. CCX was first to enter the U.S. cap-and-trade market. After a few years of operation, during which it catered to some large companies such as Dupont, CCX closed in 2007.
“As part of the Fiscal Year 2008 Consolidated Appropriations Act, signed into law in December 2007, the EPA was ordered to publish a rule requiring public reporting of GHG emissions from large sources.” (C2ES) The Greenhouse Gas Reporting Program (GHGRP) collects GHG emission data from large GHG emitters such as power plants, refineries and petroleum & natural gas systems which annually produce more than 25,000 metric tons of carbon dioxide (GHGRP Fact Sheet).
Since the closure of CCX and implementation of GHGRP the first mandatory cap-and-trade program in the United States called Regional Greenhouse Gas Initiative (RGGI) has been established for reducing GHG emissions. Although the program is not nationwide, it covers nine northeastern states including New York and Maine. (https://www.rggi.org/)