With the help of its in-house attorneys and a team of British lawyers, IntercontinentalExchange, or ICE, an Atlanta-based operator of global derivatives exchanges, has purchased Climate Exchange plc for $597 million, making a major investment in the nascent market for trading greenhouse gas emissions.

ICE’s vice president and associate general counsel, Andrew Surdykowski, said the biggest challenge from his perspective was learning the laws of the Isle of Man, a self-governing British dependency where Climate Exchange, which runs trading markets for carbon and sulfur dioxide, among other things, is incorporated. “It was the first transaction we’d done in a long time in the United Kingdom,” Surdykowski said. He said ICE also was represented by the London office of Shearman & Sterling; Climate Exchange was represented by the London office of Slaughter and May.

Climate Exchange shareholders received cash for their shares, with ICE paying $377 million from its own cash reserves and borrowing $220 million from existing credit facilities.

Surdykowski, who worked on the deal with ICE’s senior vice president and general counsel, Johnathan Short, and David Clifton, assistant general counsel for mergers and acquisitions, said his company had a long history with Climate Exchange, previously acquiring a 5 percent stake in the company and using ICE technology to run their exchanges. “We’ve partnered with them for many years,” he said.

All that helped the deal move quickly. Legal work on the deal, Surdykowski said, began in May and concluded in early July.

Climate Exchange runs three core businesses: the European Climate Exchange, which operates a trading market for carbon credits traded as part of the mandatory European Union Emission Trading Scheme, or EU-ETS; the Chicago Climate Exchange, North America’s only contractually binding, rules-based greenhouse gas emissions allowance trading system; and the Chicago Climate Futures Exchange, which  provides a contract market for regulated environmental products that include Regional Greenhouse Gas Initiative CO2 allowances and U.S. emissions such as sulfur dioxide and nitrogen oxide.

The United States created a regulated cap-and-trade program for sulfur dioxide and other acid-rain-causing emissions more than a decade ago, giving utilities a limited number of emissions allowances. Plants traded one allowance for each ton of sulfur dioxide they emitted; if they cut emissions, they could sell their extra allowances.

Just days after the acquisition, however, the U.S. Environmental Protection Agency issued new rules that basically caused the bottom to drop out of the trading market for sulfur dioxide and other acid-rain-causing emissions. The rules were issued in response to a 2008 ruling by the U.S. Court of Appeals for the District of Columbia Circuit, which said that some EPA rules conflicted with Clean Air Act regulations.

The EPA rewrote its rules, placing stricter limits on power plant emissions, but relying less on trading. The Wall Street Journal reported that one-ton allowances that had traded at $1,600 prior to the lawsuit fell, at times, to $3 each.

“The regulatory and legislative environment in the U.S. is dynamic right now,” said Kelly Loeffler, a spokeswoman for ICE.

“We acquired Climate Exchange based on their European emissions business, where the emissions cap-and-trade program is mandated under the European Union Emission Trading Scheme,” she said. “They have a pretty robust business already.”

In 2009, according to information from ICE, the European Climate Exchange’s average daily volume exceeded 20,000 contracts, up 82 percent from a year prior.

Point Carbon, a Thomson Reuters company that tracks worldwide emissions markets, reported that in 2009, the global carbon market was worth roughly $121.2 billion, with the EU-ETS worth about $94.1 billion, accounting for 68 percent of global trades.