Whitman’s free-market environmentalism

In two and a half years heading the Environmental Protection Agency, Christie Whitman caught plenty of flak from environmentalist critics of the Bush administration.

But she resigned in June with her environment-friendly reputation more or less intact, and now she’s putting some energy into conserving it. Last month Whitman, 57, joined the board of the Chicago Climate Exchange, a new online marketplace where corporations trade rights to emit pollutants into the air. “This is a voluntary approach that gives companies an economic incentive to do the right thing,” says the former New Jersey governor, who is also writing a memoir and spending time with her family. “It’s exactly in line with the approach the administration was taking when it set a goal of reducing greenhouse-gas emissions 18 percent over ten years.”

The exchange, known as CCX, conducted its first carbon-allowance auction in September and plans to begin daily trading on December 12 with at least 30 participants, including American Electric Power, Ford Motor Co. and International Paper, and brokerages Carr Futures and Refco. It’s the brainchild of interest-rate-derivatives pioneer and Northwestern University research professor Richard Sandor, who began to organize the exchange in 2002 and is its chairman and CEO. He has put five outsiders on his seven-member board, including Whitman, former Illinois governor James Thompson and retired Tupperware CEO Warren Batts. Regulation has been contracted out to the NASD. “Corporate governance is obviously a big issue,” says Sandor, 62. “Our public directors and self-regulatory approach have been well received in the community.”

Says Whitman, “If you believe climate change is an issue, and when you realize that it will be a while before we can expect a global agreement on greenhouse gases, then from an American market perspective, the CCX is the only game in town.”

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