1. SUSTAINABLE MARKET SOLUTIONS FOR GLOBAL ENVIRONMENTAL PROBLEMS The Carbon Market Dakar 12 February 2008 Edwin Aalders Director International Emissions Trading Association

2. SUSTAINABLE MARKET SOLUTIONS FOR GLOBAL ENVIRONMENTAL PROBLEMS Global Market  EU ETS Second year to be completed at the end of the month Effects of price drop in May 2006 First phase: around 1.5 Euro Second phase: around 20 Euro Publication of Phase II NAPs EU ETS review EU Commitment to Climate Change

3. SUSTAINABLE MARKET SOLUTIONS FOR GLOBAL ENVIRONMENTAL PROBLEMS Global Market  CDM Initial pricing based on Phase I EU ETS now more on its own/Phase II of EU ETS Image & Concerns in relation to HFC23 projects  JI Effect of the enlargement of the EU ETS First project presented for approval by the JISC - possible approval on 26 March 2007. Accreditation of IEs

4. SUSTAINABLE MARKET SOLUTIONS FOR GLOBAL ENVIRONMENTAL PROBLEMS Market value (€ bn) Market value per year: €10 bn 2005 €22.5 bn 2006 €15.8 bn H1 2007 €95 bn est 2010 Excludes additional project finance leveraged 2006Est 2010 EU ETS18.175 CDM/JI4.115 Other ETS0.35 Total22.595

5. SUSTAINABLE MARKET SOLUTIONS FOR GLOBAL ENVIRONMENTAL PROBLEMS

6. Global Market  US state initiatives CCX – Chicago Climate Exchange –Reach: US, Canada, Mexico, Brazil –Voluntary Exchange RGGI – Regional Greenhouse Gas Initiative –Reach: 7 Northeast and Mid-Atlantic states –10% reduction from 1990 level by 2017 CCAR – California Climate Action Registry –Reach: California, but encourages country-wide reporting –Voluntary reporting initiative

7. SUSTAINABLE MARKET SOLUTIONS FOR GLOBAL ENVIRONMENTAL PROBLEMS Top 3 preferred project types by buyers 1.Renewable Energy 2.Land Fill 3.Industrial gases Renewable energy considered to be good investment and high public relation value Compliance Market Voluntary Market

8. SUSTAINABLE MARKET SOLUTIONS FOR GLOBAL ENVIRONMENTAL PROBLEMS CDM Project performance  General under performance by 7% N2O 23% HFC- 1% Biogas-20% Geothermal-67% Hydro-10% Landfill gas-63% Wind-24% Agriculture-55% UNEP Risø Centre 01-02-08

9. SUSTAINABLE MARKET SOLUTIONS FOR GLOBAL ENVIRONMENTAL PROBLEMS International Emissions Trading Association www.ieta.org Edwin Aalders aalders@ieta.org For more information www.carbonexpo.com CARBON EXPO 7 – 9 May 2008