WASHINGTON (MarketWatch) -- Green Exchange got its approval from federal futures regulators this week to launch a trading platform that will list contracts tied to credits and allowances for greenhouses
gases.

The Commodity Futures Trading Commission said Friday it had approved the exchange's application Thursday. The announcement of its approval
comes just one day after U.S. Senate Democrats decided to table a
climate-change bill. That bill would have helped spur a much larger
derivatives market to help companies offset their carbon emissions.

Green Exchange was introduced in 2007 under the New York Mercantile Exchange and a group of banks and brokerages. Its products have been
listed at Nymex, which is now owned by CME Group /quotes/comstock/15*!cme/quotes/nls/cme
(CME
286.56,
+4.84,
+1.72%)
. The CFTC said those products will now be listed on Green Exchange, which will become a stand-alone entity.

A spokesman for Green Exchange couldn't be immediately reached for comment.

"We think the Green Exchange has all the right elements to really compete in the marketplace, and achieving the milestone of this
approval one of those elements," said Evan Ard, managing director of
Evolution Markets, a founding member of the venture. "But there's still
a lot of work to be done to effectively compete in the marketplace."

The CFTC's approval of the Green Exchange now sets the stage for competition between CME and its major rival IntercontinentalExchange
Inc. /quotes/comstock/13*!ice/quotes/nls/ice
(ICE
108.36,
+1.84,
+1.73%)
, which this year acquired the Climate Exchange PLC (CLE.LN) in a $597 million deal.

ICE's acquisition will make it a dominant force in Europe's estimated EUR100 billion carbon market. The U.S. market is still quite small,
although it has great potential to grow. Point Carbon, a consulting
firm, expects the global carbon market to grow $170 billion this year.

Both CME and ICE are targeting European and U.S. markets with their ventures. But Point Carbon estimated in March that 63% of the trading
in the U.S. carbon market was done off-exchange.

Without a climate-change bill, it could be challenging for both exchanges in the U.S. to build emissions-trading businesses.

CFTC Commissioner Bart Chilton, who has been advocating for a climate-change bill that will help create a large carbon futures
market, said Friday he hadn't lost hope despite the Senate's inaction.

"There has been and will be green trading," Chilton said. "The question now is when we will get it together and do what needs to be done for
our planet. The added benefit to doing the right thing environmentally
is that it will fuel-inject the economic engine of our
democracy--something last I checked, we sorely need."