XShares partners with Chicago Climate Exchange to develop emission products. XShares Advisors and the Chicago Climate Exchange (CCX) have pledged to develop new investment products based on carbon emissions credits.

Carbon credits confer on businesses the right to emit a certain amount of carbon dioxide within a specified time. Businesses that throw out more carbon than they're allowed can avoid penalties by purchasing carbon credits from businesses whose emissions come in under permissible levels. Many of these transactions are channeled through the CCX.

Progressive

Many say that carbon emissions are a significant contributor to accelerating processes tending to an overall increase in the average temperature of the planet. If recent moves -- especially in Europe -- to establish taxes on carbon emissions come to anything, the need for the CCX and similar exchanges worldwide will probably increase.

The concept of carbon-emission trading stems from the Kyoto Protocol on Climate Change, which posits a "cap and trade" regulation system akin to one introduced in the U.S. in the 1990s to curb acid-rain-causing sulfur dioxide emissions.

"We are very excited to be partnering with such a progressive institution as the [CCX] to develop new products based on carbon-emission credits," says XShares' co-founder Jeffrey Feldman. "At XShares we are continually looking for strategic partners like CCX to help us achieve our goal of creating innovative products that give investors more flexibility and opportunity."

XShares isn't saying when it might start offering carbon-emission ETFs. The New York firm's first five funds -- all of them focused on medical therapies or devices -- began trading on the New York Stock Exchange about three weeks ago. XShares, which closed a $10 million round of financing led by merchant bank Grail Partners on 29 January 2007, says it plans to launch at least 45 ETFs this year.

The CCX calls itself the world's only legally-binding, rules-based "greenhouse-gas" emissions-allowance trading system and the world's only global system for emission- trading based on "all six greenhouse gases." It says it has over 200 member companies. -FWR

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