Regulated vs Voluntary Carbon Markets OTC: Over The Counter The voluntary carbon markets include all carbon offset trades that are not required by regulation. Voluntary market transactions include: the purchase of carbon credits by individuals or institutions at a retail level to offset their emissions; the purchase of credits directly from project developers for retirement or resale; and the donation to GHG reduction projects by corporations in exchange for credits. At the broadest level, the voluntary carbon markets can be divided into two main segments: the voluntary, but legally binding, capand- trade system that is the Chicago Climate Exchange (CCX), and the broader, non-binding, over the counter (OTC) offset market. The Chicago Climate Exchange (CCX) CCX defines itself as "the world's first and North America's only voluntary, legally-binding, rules-based greenhouse gas emission reduction and trading system." 20 CCX is driven by a membership-based cap and trade system. Members voluntarily join CCX and sign up to its legally-binding reductions policy. Like the Kyoto markets, CCX trades 6 different types of GHGs converted into a common unit of tCO2e. The CCX's unit of trade is the Carbon Financial Instrument (CFI), which represents 100 tCO2e. CCX CFIs can be either allowance-based credits, issued by emitting members in accordance with their emission baseline and the exchange's reduction goals or offset credits generated from qualifying emission reduction projects. In 2005, the CCX also launched the European Climate Exchange (ECX), which has since become the major exchange for EU ETS allowances. CCX's parent company, Climate Exchange Plc, also launched the Chicago Climate Futures Exchange (CCFE), a CFTC-regulated futures exchange for US SO2 allowances and US NOx Ozone Season allowances. In early 2006, in anticipation of the US Northeastern state's RGGI, CCX announced the development of the New York Climate Exchange and the Northeast Climate Exchange. It has since also created the Montreal Climate Exchange as well as announced that it intends to create a California Climate Exchange. The Voluntary Offset Market Outside of CCX one finds a wide range of voluntary transactions that make up an overall voluntary market that is not driven by an emissions cap. Because this market is not part of a cap-and-trade system, where emission allowances can be traded, almost all carbon offsets purchased in this voluntary market originate from project-based transactions. Hence, this market can be referred to as the voluntary offsets market.23 Because it does not operate via a formal exchange, it can also be referred to as the voluntary Over The Counter (OTC) market. While credits from CCX are referred to as CFIs, credits in this market are often generically referred to as Verified (or Voluntary, depending on the source) Emissions Reductions (VERs), or simply as carbon offsets. Buyer motivations include wanting to manage their climate change impacts, an interest in innovative philanthropy, public relations benefits, the need to prepare for (or deter) federal regulations, and plans to re-sell credits at a profit. Suppliers in the offset market include retailers selling offsets online, conservation organizations hoping to harness the power of carbon finance, developers of potential JI or CDM projects with credits that - for a range of reasons - cannot currently be sold into the regulated market, project developers primarily interested in generating VERs, and aggregators of credits.