NEW YORK and CHICAGO, Aug. 26, 2008 (GLOBE NEWSWIRE) -- Dow Jones Indexes, a leading global index provider, and the Chicago Climate Exchange (CCX), the world's first and North America's only voluntary, legally binding integrated greenhouse gas emissions reduction, registry and trading system, today announced the launch of the Dow Jones/CCX European Carbon Index and Dow Jones/CCX Certified Emissions Reductions (CER) Index, which serve as benchmarks for participants seeking exposure to the European Union Emissions Trading Scheme and Kyoto Protocol Clean Development Mechanism (CDM), respectively. The two new indexes are the first in a series of global emissions indexes to be launched jointly by Dow Jones Indexes and CCX.
Emissions trading aims to reduce pollution using a market-based approach of providing economic incentives to companies that reduce their emissions beyond their target. In this system, also referred to as cap and trade, a government or other regulatory authority sets a cap on the amount of pollutants that can be emitted and distributes allowances, or credits, that represent the right to emit a specific amount. Companies that do not meet the cap buy credits from companies that emit below their specified amounts. The group as a whole meet the set environmental goal at least cost to society.
The European Union Emissions Trading Scheme (EU ETS) is the largest multi-country, multi-sector emissions trading program in the world. The Clean Development Mechanism is a program under the Kyoto Protocol that allows developed nations committed to reducing greenhouse gas emissions to invest in projects that reduce emissions in developing nations to offset the costs of lowering emissions in their own countries.
"Reducing greenhouse gases and other pollutants has become a major worldwide initiative that has drawn the participation of industrialized and emerging economies in key regions around the globe. Emissions trading has surfaced as the most cost-efficient means of achieving this goal and the Chicago Climate Exchange is well positioned to facilitate this trading on a global basis. The Dow Jones/CCX EUA and CER Indexes provide market participants with price gauges to assess their exposure to this growing asset class. We hope to expand our offerings for emissions-themed benchmarks in the future," said Michael A. Petronella, president, Dow Jones Indexes.
"The launch of the Dow Jones/CCX EUA and CER Indexes highlights CCX's commitment to build a robust market so that the private sector can play its critically important role in advancing environmental and social objectives," said Dr. Richard Sandor, chairman and chief executive officer, CCX. "This suite of index products will broaden the pool of participants in the market while furthering transparency. Our alliance with such a world-renowned brand as Dow Jones is a win-win for the growing worldwide emissions market."
The Dow Jones/CCX European Carbon Index is composed of actively traded European Union Allowances (EUA) futures contracts on the European Climate Exchange. It measures the present discounted value of EUAs -- the carbon credits issued in the European Union Emissions Trading Scheme, across different maturities. The Dow Jones/CCX CER Index measures the present discounted value of CERs -- the carbon offset allowances issued by the United Nations under the Kyoto Protocol Clean Development Mechanism, across different maturities.
All contracts used in the indexes' calculations are the European Climate Exchange Carbon Financial Instrument Futures listed on ICE Futures.
The Euribor interest rates are used to discount maturities of the nearby contract while the Euro Interest Swap rates are used to discount the December expiry contracts for the two subsequent years.
The indexes are weighted by the percentage of open interest that each contract has among the three included contracts on the last trading day of the previous quarter. The weightings of the underlying contracts for both indexes are rebalanced quarterly in April, July, October and January.
Unlike equities that give shareholders an ownership stake in a corporation, carbon futures contracts normally specify a certain delivery date of the underlying physical carbon spot. To avoid the delivery process and maintain a long futures position, nearby contracts must be sold and contracts that have not yet reached the delivery period must be purchased. This process is known as "rolling" a futures position. The Dow Jones/CCX European Carbon and CER indexes are "rolling indexes" that roll once a year in December over a four-day period.
The Dow Jones/CCX European Carbon and CER indexes are calculated in euro and values are published end of day. Estimated daily back-tested history for the Dow Jones/CCX European Carbon Index is available back to January 2, 2008; for the Dow Jones/CCX CER Index, data is available back to April 1, 2008.
For more information please visit www.djindexes.com.
The Dow Jones/CCX European Carbon Index and Dow Jones/CCX Certified Emissions Reductions (CER) Index were first published on August 26, 2008. All estimated daily historical closing prices prior to that date are based on backtesting (i.e., calculations of how the index might have performed in the past if it had existed). Backtested performance information is purely hypothetical and is solely for informational purposes. Backtested performance does not represent actual performance, and past performance is not indicative of future results.
Journalists may e-mail questions regarding this press release to PR-Indexes@dowjones.com
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About Dow Jones Indexes
A full-service index provider, Dow Jones Indexes develops, maintains and licenses indexes for use as benchmarks and as the basis of investment products. Best known for the Dow Jones Industrial Average, Dow Jones Indexes also is co-owner of the Dow Jones STOXX indexes, the world's leading pan-European indexes, and together with Wilshire Associates, provides the Dow Jones Wilshire Global Index family, which is anchored by the Dow Jones Wilshire 5000 and covers more than 12,000 securities in 61 markets. Beyond equity indexes, Dow Jones Indexes maintains a number of alternative indexes, including measures of the hedge fund and commodity markets. Dow Jones indexes are maintained according to clear, unbiased and systematic methodologies that are fully integrated within index families. www.djindexes.com
Dow Jones & Company (www.dowjones.com) is a News Corporation company (NYSE:NWS) (NYSE:NWS.A) (ASX:NWS) (ASX:NWSLV) (www.newscorp.com). Dow Jones is a leading provider of global business news and information services. Its Consumer Media Group publishes The Wall Street Journal, Barron's, MarketWatch and the Far Eastern Economic Review. Its Enterprise Media Group includes Dow Jones Newswires, Dow Jones Factiva, Dow Jones Client Solutions, Dow Jones Indexes and Dow Jones Financial Information Services. Its Local Media Group operates community-based information franchises. Dow Jones owns 50% of SmartMoney and 33% of STOXX Ltd. and provides news content to radio stations in the U.S.
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About CCX/CCFE
CCX is an Exchange whose objectives are to apply financial innovation and incentives to advance social, environmental and economic goals. CCX, which began trading in 2003, is the world's first and North America's only legally binding, rules-based greenhouse gas emissions allowance trading system, as well as the world's only global system for emissions trading based on all six greenhouse gases. CCX members are leaders in greenhouse gas management and mitigation, including offset providers and offset aggregators, and located throughout the United States. CCX members derive from all sectors of the global economy, including the public sector, and emissions reductions being achieved through CCX by major utilities, corporations, cities, states and counties, are the only reductions in North America being achieved through a legally binding compliance regime, subject to independent third party verification provided by FINRA and price transparency. The founder, Chairman and CEO of CCX is economist and financial innovator Dr. Richard L. Sandor, who was named a Hero of the Planet by Time magazine in 2002 for his founding of CCX, and in 2007 as the "father of carbon trading." For a full history of CCX, full roster of CCX members, daily prices and other Exchange information, see www.chicagoclimateexchange.com.
Chicago Climate Futures Exchange (CCFE), a wholly owned subsidiary of the Chicago Climate Exchange, is a CFTC designated contract market which offers standardized and cleared futures and options contracts on emission allowances and other environmental products. Clearing services are provided by The Clearing Corporation, the only active independent futures clearinghouse in the world. Market surveillance services are provided by the National Futures Association, the industry wide, self-regulatory organization for the U.S. futures industry.
CCX, a U.S. corporation, launched its trading platform in 2003. In 2005, CCX launched the European Climate Exchange (ECX), now the leading exchange operating in the European Union Emissions Trading Scheme. Since 2006, both CCX and ECX have been owned by Climate Exchange plc, a publicly traded company listed on the AIM division of the London Stock Exchange (CLE.L).