Free Market, Cleaner Air
A few years later, as president of the Joyce Foundation, DiPerna got the nonprofit's board to fund the launch of the Chicago Climate Exchange.
Then, Sandor says, "everything that could have gone wrong went wrong." President Bush withdrew from the Kyoto agreement, meaning U.S. businesses had little incentive to reduce carbon emissions. The dot-com crash, recession, 9/11, and corporate scandals followed. Not the best time to convince companies they should sign a contract to reduce their greenhouse gases. "My knees were bloody from groveling," Sandor says. Start-up of trading was delayed while he kept the project going with "as much money as I could put together from friends and family." (CCX is a private, for-profit company. A spokesman declined to say whether it is profitable, but it stands to make money from transaction fees should trading take off.)
Finally, a vehicle was established on the London Stock Exchange through which institutional investors could plow money into Sandor's venture. CCX raised $18 million a week before it opened for trading.
Because Europe signed on to the Kyoto agreement, it has become an important locus of business for CCX. European companies trade carbon credits at a subsidiary, the European Climate Exchange. "We feel we are a good way towards our goal of being the international brand" as an emissions-trading platform, says Sandor.
Of course, while carbon dioxide emissions credits in Europe have surged in value from about $9 to $30 per ton since Kyoto went into effect early this year, in Chicago they have hovered between $1 and $2 since 2003. With no mandate from Uncle Sam, the market hasn't put much premium on reducing carbon emissions here.
Chess match. But last week, the Senate held the first of several planned climate-change hearings, following a bipartisan "sense of the Senate" resolution adopted earlier this summer that mandatory greenhouse gas cutbacks were needed. Lawmakers have moved closer to the idea because businesses, like those involved in CCX, have shown it can be done. Sandor notes that he has been criticized by both left and right, but that as a chess enthusiast (he once beat the legendary Bobby Fischer when both were teenagers in Brooklyn), he knows that the game is controlled from the center.
While the Senate considers climate change, Sandor already is on his next big idea; the Joyce Foundation has given him $440,000 to explore the idea of trading in another scarce commodity: water. "How can you create incentives for conservation without compromising people's right to access?" asks Ellen Alberding, current president of Joyce (DiPerna now is an executive with CCX). "Again, his track record led us to invest another chunk of money."
When he isn't thinking about new markets, Sandor works on his art collection, which covers the 150-year history of photography. He points out that many authorities didn't consider photography an artistic medium when he began his collection three decades ago; as in the finance world, his contrarian instincts proved prescient. "I always try to find the value proposition," he says, "where one isn't being recognized."
Born: Sept. 7, 1941
Family: Wife, Ellen. Children, Julie and Penya. Three grandchildren and another on the way.
Education: B.A., City College of New York, 1962; Ph.D., economics, University of Minnesota, 1967
Academic: Research professor, Kellogg School of Management, Northwestern University
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