CNX Gas Corporation today announced the company's registration of greenhouse gas emission offsets with the Chicago Climate Exchange (CCX(R)). Governor Timothy M. Kaine joined the company and recognized CNX Gas Corporation for the significant impact its coalbed methane capture project in southwest Virginia is having on the reduction of greenhouse gas emissions in Virginia.
CNX Gas announced today it has registered 8.4 million metric tons of emission offsets for trading on the CCX, a legally binding greenhouse gas reduction and trading exchange for emission sources and offset projects. CNX Gas' offsets arose out of CNX Gas' coalbed methane capture project in Buchanan County, Virginia, for the years 2003 through September 2007. Additional offsets are expected to be generated in the future.
"This is a win-win-win situation for all parties involved here today," CNX Gas President and CEO Nicholas J. DeIuliis said about the significance of the relationship between CNX Gas, the Chicago Climate Exchange and the Commonwealth of Virginia. "Not only are we creating value for our shareholders through the registration of emission offsets on the Chicago Climate Exchange, we are furthering the goals of Governor Kaine's 2007 Virginia Energy Plan, making Virginia a leader in addressing one of the most important issues in the country today."
Dr. Richard Sandor, Chairman and CEO of Chicago Climate Exchange, echoed Mr. DeIuliis' thoughts: "The Chicago Climate Exchange facilitates private sector approaches to addressing the climate change issue and we are very pleased to partner with CNX Gas and to see the positive impact that our partnership is having on Virginia and the country."
"CNX Gas' methane capture project in Buchanan County is exactly the type of private sector initiative that will enable Virginia to achieve our goal of reducing the Commonwealth's total greenhouse gas emissions by 30% by 2025," remarked Governor Kaine. "Just to put it in perspective, the 8.4 million metric tons of CO2 equivalents being registered by CNX Gas today, is equivalent to the annual carbon emissions of 1.6 million automobiles. Moreover, because CNX Gas sells the methane it captures, we are simultaneously increasing the Commonwealth's indigenous energy production, which was one of the goals I laid out in my 2007 Virginia Energy Plan."
CNX Gas has a unique position in the natural gas industry relative to its peers by the nature of its primary asset, coalbed methane or "CBM." CBM is gas found naturally in coal seams and must be removed from the coal seam prior to mining coal. Historically, CBM was vented into the atmosphere. Today, CNX Gas captures the CBM in advance of mining, which improves the safety of coal mining and reduces the carbon footprint of coal. Methane is a greenhouse gas with a Global Warming Potential (GWP) more than 20 times that of carbon dioxide. The capture of methane not only realizes an energy source from what was once a waste product, but it also increases energy efficiency by creating two products (coal and gas) from one given resource, coal.
CNX Gas became a registered offset provider on the Chicago Climate Exchange in 2007. CCX is a rules-based, greenhouse gas emission reduction and trading system. CCX emitting members make a voluntary but legally binding commitment to meet annual greenhouse gas emission reduction targets. Those emitting members who reduce their emissions below their targets have surplus allowances to sell or bank; those who fall short of their targets comply by purchasing allowances or offsets, which are traded on the CCX as Carbon Financial Instruments (CFI) contracts. CFIs represent 100 metric tons of emission reductions or offsets. As a CCX offset provider, CNX Gas is not bound to any emission reduction targets. An offset provider is an owner of an offset project, such as CNX Gas's methane capture project in Buchanan County, Virginia, that registers and sells offsets on its own behalf. In order to register and trade CFI's, the CCX Committee on Offsets must approve the project and the project must then be validated by an independent CCX verifier. Once verified, CCX then qualifies emission reduction offsets for each specific project. Methane offsets are granted on the basis of avoiding methane emissions by diverting gas into gas pipelines for commercial sale. After an emission reduction project is qualified, offsets generated by the project can be registered and sold through CCX to emitting members that require offsets to meet their emission reduction targets. CNX Gas has registered 8.4 million metric tons of offsets on CCX, but it has not determined whether or when it will sell its registered emission offsets. The decision to sell qualified offsets on CCX will depend on a number of factors including the market trading price for the offsets, CNX Gas' cash needs and the likelihood of legislation relating to greenhouse gas emissions. As of June 9th, 2008, the closing price for 2003 vintage CFI's was $5.50 per metric ton.
CNX Gas' ongoing methane capture activities in Virginia and elsewhere will result in further methane emissions capture that could result in offsets that qualify for registration on the CCX or other markets. CNX Gas and CONSOL Energy Inc. have agreed generally to split 50-50 all emission offsets generated by either of them or their respective subsidiaries.