Emissions Trading

Emissions trading is a key tool in both voluntary and mandatory greenhouse gas emissions-reduction programs. Ford was an early participant in carbon markets, with a goal of gaining experience that will be valuable in an increasingly carbon-constrained world.

For example, Ford, along with 11 other companies and the City of Chicago, founded the Chicago Climate Exchange (CCX) in 2003. The CCX is a GHG emissions-reduction and trading program for emission sources and projects in North America. It is a self-regulated, rules-based exchange designed and governed by CCX members. Ford is the first and only auto manufacturing participant in the Exchange.

Through the CCX, we committed to reducing our North American facility emissions by 6 percent between 2000 and 2010. The Exchange marks the first time in the United States that major companies in multiple industries have made a voluntary binding commitment to use emissions trading to reduce their North American GHG emissions. The Exchange enables participants to receive credit for their reductions and to buy and sell credits to find the most cost-effective way of achieving reductions.

Ford was also one of the original companies to join the UK Emissions Trading Scheme, the first government-sponsored, economy-wide, cross-industry GHG trading program. Ford Motor Company Limited (UK) entered the program in March 2002, committing to and achieving a 5 percent CO₂ reduction for eligible plants and facilities over five years.

Ford now participates in the EU Emission Trading Scheme, which commenced in January 2005 and is one of the policies being introduced across Europe to reduce emissions of carbon dioxide and other greenhouse gases. The second phase of this program runs from 2008 to 2012 and coincides with the first Kyoto Commitment Period. Additional five-year phases are expected to follow.

Despite Ford facilities' low-to-moderate CO₂ emissions (compared to other industry sectors), the EU Emission Trading Scheme regulations apply to eight Ford and Volvo facilities in the UK, Belgium, Sweden and Spain. The trading scheme requires us to apply for emissions permits, meet rigid emissions monitoring and reporting plans, arrange for third-party verification audits and manage tax and accounting issues related to emissions transactions.

Ford is actively involved in an ongoing evaluation of the EU Emission Trading Scheme at both EU and member-state levels. We have used the experience gained from participating in the market-based mechanisms described above to ensure that we operate in compliance with the scheme's regulatory framework. Ford anticipated the start of the EU Emission Trading Scheme and established internal business plans and objectives to maintain compliance with the new regulatory requirements.

Comprehensive reporting forms the foundation for all emissions trading. We voluntarily report GHG emissions in Australia, Canada, China, Mexico and the Philippines. This reporting, which has won several awards, is discussed in the Environment section.