MONTREAL — As Canada’s two most populous provinces were letting the ink dry on a carbon cap-and-trade system agreement, the Montreal Climate Exchange launched trading.

According to the Globe and Mail, the Ontario and Quebec governments have joined forces to combat climate change through a carbon credit system.

Following a joint cabinet meeting, Ontario Premier Dalton McGuinty and Quebec Premier Jean Charest signed an accord to set up a cap-and-trade system, which could be up and running by 2010.

Specific emission reduction targets of the proposed cap-and-trade system have not been set and the bi-provincial agreement has drawn criticism from federal Environment Minister John Baird.

However the agreement turns out in the end, the Montreal Climate Exchange (MceX) is not waiting to find out and is officially open for business.

The MceX is a joint venture of the Montréal Exchange and the Chicago Climate Exchange and offers trading of a new futures contract on Canada carbon dioxide equivalent (CO2e) units.

"The listing of the MCeX futures contract is a ‘first’ and it makes Montréal Climate Exchange the first regulated environmental market in Canada," said Luc Bertrand, president and CEO of the Montréal Exchange, deputy CEO of the TMX Group and chairman of MCeX.

"We know this is the first step in a gradual process of constructing environmental markets in Canada and attracting investors to participate," added Bertrand. "Our goal is to position MCeX as a leading developer of market solutions that help industry reduce greenhouse gas emissions as efficiently as possible."

The MCeX carbon futures contract has been designed to help industrial participants manage their emissions risks at the lowest cost while also creating continuous incentives for technological innovations that reduce greenhouse gas emissions.

"We aim to build a critical mass of trading activity in Canadian carbon futures," explained Bertrand. "The MCeX market will help Canadian industry discover the true ‘price of a tonne of carbon’ under the new federal regulatory framework."

The market is expected to bring together a variety of participants including large regulated emitters, investors in voluntary emissions reduction projects, financial institutions, institutional investors, hedge funds and insurance companies.