Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc CleanTech and Carbon in the Pacific Northwest Seattle, WA November 8, 2007

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc Presentation Preview 1) Environmental Markets Don’t Work without a Legal Framework Oregon’s Bottle Bill in early 1970s Portland vs. Vancouver, WA Carbon Markets Today US vs. Europe and Japan 2) Once the rules are set, there are many opportunities. Will describe many concrete opportunities Will describe how EcoSecurities partners with technology providers

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc Annex I The Kyoto Protocol Non-Annex I Not ratified

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc Emissions Trading between Annex 1 Countries >Based on historic emissions, each nation is granted a certain number of allowances through a National Allocation Plan. >If Nation A emits less than its total number of allowances (EUAs), it can sell it’s extra credits to Nation B. >This trading can happen between nations or between capped companies.

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc Emission cap Actual emissions Buyer Carbon Credits (CERS) Carbon value ($) Annex I (e.g. England) Non – Annex I (e.g. Mexico) Seller A CDM project reduces the GHG emissions in the CDM country Emissions Trading between Annex 1 and non-Annex 1 Countries U.N. – approved emissions reductions from a Non–Annex I country can be sold – as CERs -- to an Annex I country

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc The EU ETS and European emissions Others Power Other Industry Household Services & Agriculture Refineries Other Energies Iron & Steel Cement Transportation >The EU ETS sectors (turquoise) currently account for approximately 46% of the emissions of the EU, over 2 billion tonnes of CO2 emissions per year covering approximately 11,000 industrial installations

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc Annex I The Kyoto Protocol Non-Annex I Not ratified

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc OriginationImplementation Commercialisation Consulting Finance & Accounting / HR / Legal / IT / Marketing / CSR Investment Originating CDM Offsets: Selling Non-Annex 1 Credits to Annex 1 Emitters

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc EcoMethane Partnership Aguascalientes project, Mexico

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc N2O from nitric acid plants  EcoSecurities is the largest developer in the world (24 million tonnes from 27 projects)

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc Other Kinds of Emissions Reduction Projects Biomass and waste mgt Small scale hydropower Pig waste biodigestors Landfills Industrial energy efficiency Current projects use 18 technologies in 36 countries Agricultural biodigestors

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc Future CleanTech Partnerships 1.Agricultural methane digesters for bovine and porcine power generation. 2.Small dimensional wood pelletization for biomass fuel switching. 3.High tech, GPS-guided precision agriculture. 4.Satellite-monitored avoided deforestation. 5.Programmatic energy efficiency. 6.Transportation.

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc EcoSecurities guides projects through this process Implementation Process PIN=Project Idea Note, PDD=Project Design Document, PP=Project Participant, DNA=Designated National Authority, DOE=Designated Operational Entity The project cycle is convoluted, time consuming, and demands specialized skills EcoSecurities implementation team has 64 skilled professionals, working with sophisticated internal tools and systems Experience leads to successful track record of implementation: >13 new methodologies approved >Approximately 90 Projects Registered – and growing every week

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc CDM Risks and Rewards CER price RegistrationMonitoringHost country approval VerificationValidationProduction CostIssuanceImport to EU ETS High Risk with binary outcome Even on issuance, ongoing performance risk from project. Requires close relationship with project to maximise projected output Supply considerations - I

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc Guaranteed Delivery Transaction >EcoSecurities delivers CERs from the portfolio, not specific projects >Delivery risk removed from buyer (firm volume) >EcoSecurities pays liquidated damages in case of non delivery >Utilising portfolio approach and adding value to the transaction >Projects kept in portfolio until final issuance >Sales price dependent on EUA reference price Project A Project B Project C Project D Project E “ secondary” CERs EcoSecurities Net-Portfolio Buyer Delivery Risk

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc Recap 1) Environmental Markets Don’t Work without a Legal Framework. 2) Once the rules are set, there are many opportunities. If your technology significantly reduces GHG emissions, contact us.

Carbon credits - origination to commercialisation© 2006 EcoSecurities Group plc Thank you. Steve Gutmann Senior Commercialisation Manager EcoSecurities