Exchange-traded products for the EU Emissions Market Milano Energia Milan, 5 October 2005 Peter Koster, Chief Executive Officer, European Climate Exchange

2 Contents Background on the European Emissions market; Market characteristics: Volumes, Prices and Players Introduction to the European Climate Exchange; How do emissions relate to other energy markets? Looking ahead: the carbon market & the future

3 European Climate Exchange »The European Climate Exchange (ECX) is a wholly-owned subsidiary of the Chicago Climate Exchange (CCX) which, in collaboration with the International Petroleum Exchange (IPE), offers a series of emissions products; »ECX Carbon Financial Instruments futures Contracts are listed and traded on the IPE and offers a pan-European electronic trading platform where industry and financial institutions can trade CO 2 under the EU Emissions Trading Scheme; »ECX CFI futures Contracts are financially guaranteed by LCH.Clearnet; »At current prices, the EU carbon market has an annual baseline value of €50 bn in 2005; »ECX/ IPE has become the leading CO 2 emissions exchange in Europe with 38 million tonnes traded in the first five months of activity; »ECX, IPE and Powernext will co-operate to offer futures and spot contracts on an integrated screen.

4 Development of the EU Emissions Market First forward trade in February 2003 First cash-settled OTC trade in February 2005 First spot trade in February 2005 ECX IPE futures contract launched on 22 nd April 2005

5 Market Development Forward trading began in February 2003 and 10 MtCO 2 were traded in 2004 –approximately 140 million tonnes CO 2 traded first in the 9 months of 2005; Market infrastructure: –Increasing numbers of market participants – now active; –9 brokers; –7 exchanges; All 25 National Allocation Plans now approved by EU Commission; 11 National registries currently operational (fully or partly). Companies from all industrial sectors included in EU Emissions Trading Scheme have traded at ECX/IPE.

6 Price and volume ECX 5 months activity = 42 million tonnes CO 2 traded on ECX

7 Market Shares

8 IPE ECX CFI volatility

9 Correlation with other IPE markets

10 Correlation with other IPE markets (2)

How can you trade ECX CFI futures Contracts on IPE? Trade directly as an IPE Member; or Order-Route as a customer of an IPE Member or a Broker electronically (or place orders by telephone);

ABN AMRO Futures* Accord Energy ADM Investor Services International* Amerex Atel Trading Bache Financial* Banco Santander* Barclays Capital* Bear Stearns International* BHF Bank* BNP Paribas Commodity Futures* BP Gas Marketing Breakwater Trading Calyon Financial* Cargill Investor Services* Climate Change Markets* Credit Suisse First Boston (Europe)* Deutsche Bank* Dresdner Bank* E.On UK Electrabel Fimat International Banque* Fortis Bank Global Clearing* Goldman Sachs* ICAP* JP Morgan Securities* Kyte Broking MAN Financial* Marquette Partners (UK) Merrill Lynch International* Merrill Lynch Commodities (Europe) Mizuho Securities* Morgan Stanley & Co International* Optiver Refco Overseas* Saxon Financials Scottish Power Energy Management SEB Bank* Sempra Energy Europe Shell Energy Trading Shell International Trading & Shipping Smartest Energy Spectron Energy Services Starmark Trading TFS Derivatives Tradelink UBS* Members in ECX CFIs on IPE *Entities marked with a star are able to offer clearing services to third parties.

13 IPE ECX CFI futures - Contract specifications Settlement Physically settled against transfer of EU allowances. Settlement cycle Quarter-ends on Mar / Jun / Sept / Dec cycle to Mar 2008 – first expiry in December annual contracts – Dec expiry 2008 – Contract size 1000 tonnes CO 2 (i.e allowances). Tick size €0.05 per tonne (i.e. €50.00 per contract). Trading hours 8:00am to 5:00pm (GMT/BST). Closing price Weighted average of trades during the daily settlement period. Fees Members €2 per lot per side, Non-members €2.5 per lot per side. LCH.Clearnet clearing fee €1 per lot per side.

14 Other information INFORMATION VENDORS CODES: Bloomberg (MOA/EMIT)Reuters (0#CFI) CMS (UX)IDC ( t, UX) CQG (UX)IPE Energy Live (LUX) E-Signal/Futuresource (LUX)Telerate VAT: Interim TMO status received – transfers between the Member and the LCH.Clearnet will be zero-rated for VAT purposes.

15 Chicago Climate Exchange Voluntary, legally binding pilot greenhouse gas trading program; Includes emitters and specified offset projects in North America; All six greenhouse gases included (converted to CO2e); Emitters commit to cut 1% per year (achieve -4% in 2006); Over 100 international companies have signed up for CCX membership inc Dupont, IBM, Stora Enso, Rolls Royce, Motorola, American Electric Power, Confederation of British Industry etc.

16 Looking ahead.. By year end integrated platform ECX/ IPE (futures) and Powernext (spot); ECX/ IPE plan to launch more emission derivatives: options and spreads; EU ETS will foster the development of the CDM and JI market; Carbon becomes an integrated part of the energy portfolio; Linking Europe to other trading schemes.

17 Legal disclaimer ECX/ IPE is seeking recognition from the Commisione Nazionale per la Societa e la Borsa (CONSAB) as a foreign market under Article 67(2) of Consolidated Finance Act. The application is currently pending; The information given in this presentation is not, and is not intended to be, an invitation to access the market directly or via a non-Italian member; The information given in this presentation is not, and is not intended to be, a solicitation or an offer to buy or sell any of the products that are traded on the market.

18 Thank You! For more information, please contact: Albert de Haan, Commercial Director Sara Stahl, Carbon Economist Telephone: +31 (0) Website: