1. Andaz Liverpool Street London 10 April 2008

2. Finexpo Green City Panel on Emissions Trading Phil Brown CSX 10 th April 2008

3. Climate Spot Exchange ( CSX) is an organised spot market for emissions allowances. The market model is the result of a two-fold partnership between Climate Exchange plc through it’s subsidiary CSX, and Euroclear Bank. This market is based on four principles: –straight through process from transaction to delivery –price transparency –non-discriminatory access to the market and complete anonymity of participants –guarantee of transaction performance based on a real time payment versus delivery procedure managed by Euroclear.

4. How the market has developed First Forward Trade February 2003 First Spot Trade February 2005 ECX ICE Futures Contract launched 22 April 2005 ECX Linked Options traded Sept 2005 ECX Options Launched May 2006

5. Before 2005 correlations between commodity markets within European power were weak Gas and coal prices determined marginal cost but were not linked with each other Because of emission trading we have now trading markets that link power with commodity markets As a result companies (particularly utilities) are now exposed to volatile commodity markets like never before Oil market Power market Gas market CO 2 Coal market Source: McKinsey A New Energy commodity

6. Carbon Gas Electricity Oil EU ETS - Energy / Price Correlation

7. EU ETS - Price and volume

8. Size scope of the market

9. Contacts Phil Brown Climate Spot Exchange +44 (0) 207 317 6943 +44 (0) 7950 764 895 Phil.Brown@climate-spot.com Jane Bamblett Director Product Management Euroclear SA/NV +44 (0) 20 7849 0226 +44 (0) 7748 936838 Jane.Bamblett@euroclear.com

10. Andaz Liverpool Street London 10 April 2008

11. Richard Wilson Head of Emissions Tullett Prebon 020 7302 5211 rwilson@tullettprebon.com Finexpo - Green City agenda Emissions trading and the carbon economy - 2008 and beyond 10 th April 2008

12. Emissions trading and the carbon economy - 2008 and beyond Products: - European Union Allowances (EUAs) Certified Emission Reductions (CERs) -Primary -Secondary - Verified Emissions Reductions (VERs) Options on Euas and Cers ______________ Exchange cleared -otc cleared - EFPs

13. Emissions trading and the carbon economy - 2008 and beyond The 1 st chart shows volumes both executed and cleared through ecx. The 2 nd chart shows data collated by LEBA from its member brokers. Brokers still do majority of execution.

14. Emissions trading and the carbon economy - 2008 and beyond CER: March 08 saw huge growth in CER volume due to ability to clear through a major exchange – Ecx launched on 15 th March

15. Emissions trading and the carbon economy - 2008 and beyond ITL -when? -what happens to cer mkt? -become like a bond mkt? -further structured products ie repos….? -If North America join how large?

16. Emissions trading and the carbon economy - 2008 and beyond North America: -All Presidential Candidates indicate need for a Carbon trading system Already Sox/ Nox/ Recs/ Rggi/ Vers state by state RECs now vs. a federal standard down the road regional standards (i.e. rggi/ auctioning sep08)vs a federal standard Fed legislation that looks to a world wide standard? Earliest legislation 2010 – rest of world looking at post 2012 Still many people think will only definitely be in place by 2020

17. Emissions trading and the carbon economy - 2008 and beyond IDBs bring new parties to the forum IDBs are able to build deals in confidence and with impartiality IDBs encourage greater volumes in a relatively thin exchange market without prices disappearing IDBs are beneficial in creating structured products and deals including options and cross commodities IDBs and Exchanges work well together to facilitate market growth and in the process provide more liquidity to the end user

18. Emissions trading and the carbon economy - 2008 and beyond Thank You Richard Wilson Head of Emissions Tullett Prebon Tel: +44 (0) 20 7200 5211 Mb: +44 (0) 7957 765324 rwilson@tullettprebon.com Yahoo: richwilson72

19. Andaz Liverpool Street London 10 April 2008

20. Finexpo Green City Panel on Emissions Trading Chris Leeds Head of Environmental Markets Sales 10 April 2008

21. Agenda Barclays Capital Emissions Capabilities The link between carbon trading and other asset classes How OTC and exchange traded markets are likely to expand and change Cap and Trade vs. a Tax system

22. Barclays Unrivalled Experience in the Carbon Market A broad range of offerings in the Environmental Markets  Barclays Capital has been at the forefront of emissions trading since the inception of the EU emissions trading scheme in 2004  Barclays Capital is one of the largest liquidity providers in the carbon market  We have traded over 600 million tonnes of carbon credits, with a total notional value of $14 billion  Access to a large network of customers across all industries within Europe and beyond  Unrivalled primary origination team. Two of our team are members of the Methodology Panel to the UNFCCC CDM Executive Board.  Standardised the secondary CER market with the launch of the “Standard CER Forward Agreement”  Recognised as a key player in the emissions market through various industry awards  Established the Barclays Capital Global Carbon Index (the “BGCI”) which has been designed as an international benchmark for the carbon industry

23. Team rankings / awards Pioneers in Emission Dealing December 2005 No 1 Europe ETS allowances trading for two years running Energy & Commodity Rankings March 2007 Environment No. 1 Europe CERs trading Energy & Commodity Rankings March 2007 Emissions Trading House of the Year Investment Banking Awards October 2007 Best Trading Company for two years running Carbon Market Awards March 2007 Best Trading Company for EU Emissions December 2006

24. Weather Economic growth C02-free electricity production High gas prices High coal prices CER/ERU Imports Demand Price The link between carbon trading and other asset classes

25. €/MWh €/Mt

26. The link between carbon trading and other asset classes €/Mt p/th

27. EUA CO 2 spot price behaviour during Phase I (EUR/MT) Fundamental trading activities by the shorts (utilities) led to rising prices at beginning of Phase I EU published emissions data showed conservative allocations (98 million MT excess) leading to structural fall The depreciation was compounded by the industrials (longs) only becoming active towards the end of Phase I Source: Barclays Capital The link between carbon trading and other asset classes

28.  Brent crude trades around 50 billion barrels annually worth $5 trillion  German power trades around 5 times underlying (the ‘churn’) - 450TWh = 2250TWh = €135 billion  EUAs traded 2.4 bn tonnes, around 100% of total allocation in 2007 worth around €24 bn What can we realistically expect?  Physical underlying defined as the shortfall in the market - 1 bn tonnes. Churn will be ~ 5 x underlying – 20M tonnes per day – 5 billion tonnes pa => €100billion annualised  Spread trading of inventory and CERs could add another 5M tonnes per day = €25 billion  At around €125billion this is as big as the size of the German power market  Auctions may increase churn as allowances may be bought by intermediaries who will have to onward sell OTC and exchange traded markets

30. Market Shares Carbon Exchanges OTC and exchange traded markets

31. Emissions after trading (40tCO2) 50 Units sold Units bought Emissions before trading (50tCO2) Emissions after trading (60tCO2) Cap Emissions (tCO2e) Installation 1 – abatement costs < permit price Installation 2 – abatement costs > permit price +10 -10 Principles behind emissions trading: Cap and Trade Cap and Trade vs. a Tax system

32.  “A modest carbon tax of $15 per ton of CO2 emitted would result in an 11 percent decline in CO2 emissions” - AEI UK diesel price, taxation and consumption Sources: SCOTTISH TRANSPORT STATISTICS No 24: 2005 Edition, National (UK) Statistics Online Cap and Trade vs. a Tax system

33. Finexpo Green City Panel on Emissions Trading Chris Leeds Head of Environmental Markets Sales 10 April 2008

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35. Andaz Liverpool Street London 10 April 2008