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Carbon trading and market oversight issues


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Session from Carbon TradeEx America
Chicago, IL
Sept 28 - 29, 2010

~ Jason Patrick, BAML
~ Lenny Hochschild, Evolution Markets
~ Randy Lack, Element Markets
~ Jane Lloyd, Markit

~ Jeffrey Fort, Sonnenschein Nath & Rosenthal LLP; (SNR-Denton, US, LLP effective September 30, 2010)

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Carbon trading and market oversight issues

  1. 1. CARBON TRADING AND MARKET OVERSIGHT ISSUES Carbon Trade Ex, Chicago, IL September 28, 2010
  2. 2. The Panel • Jason Patrick, BAML • Lenny Hochschild, Evolution Markets • Randy Lack, Element Markets • Jane Lloyd, Markit • Moderator, Jeffrey Fort, Sonnenschein Nath & Rosenthal LLP; (SNR-Denton, US, LLP effective September 30, 2010)
  3. 3. Browse 0xC646A4 none F 0 alse true GHG Markets and Regulatory Oversight Carbon Trade Ex – Carbon Trading and Market Oversight Panel Chicago – September, 2010 4
  4. 4. Award Winning Brokerage Platform Evolution Markets is a market leading commodities brokerage firm focused on all environmental and clean energy markets ENVIRONMENTAL MARKETS ENERGY MARKETS • Carbon Credits & Allowances • Green Power Transactions • Renewable Energy Credits • Biofuels • SO2 Emissions Allowances o Ethanol o Biodiesel • NOX Emissions Allowances • OTC Physical Coal o Houston/Galveston NOX • OTC Coal Derivatives o RECLAIM (L.A. NOX & SO2) • Natural Gas • Weather Derivatives • Nuclear Fuels Evolution Markets has pioneered many of the first carbon transactions in the various global carbon markets inclusive of the first EUA, Indexed CER, CER option and AAU transactions Evolution Markets Inc. – Proprietary & Confidential
  5. 5. Leadership in the Markets We Serve 2000 2001 2002 2003 2004 2005 2006 2007 2008 Top SO2 Allowance Broker * * * * Top NOx Allowance Broker * * * Top EU GHG Allowance Broker * Magazine Customer Top U.S. GHG Credit Broker Survey * Top U.S. Renewables Broker Carbon Market Awards Top RECLAIM NOx Allowance Broker 2005: Best Broker Top U.S. Emission Reduction Credit Broker * Top Kyoto Credits Broker * * * * * * Top Weather Derivatives Broker Best Broker, US Physical Forwards (Coal) Best Broker, Europe ETS Carbon Credits * * Best Specialist Broker (‘08) Best Broker, U.S. Environmental Products * * House of the Year: * * Best Broker, Western U.S. Nat Gas Short-term European Emissions (‘07) * * Best Broker, Western U.S. Nat Gas Long-term Weather / Emissions (‘04) Best Broker, U.S. Weather Swaps Brokerage * * * * * Best Broker, European Weather Derivatives Brokerage * * * *category runner-up Evolution Markets Inc. – Proprietary & Confidential
  6. 6. Leadership in the Markets We Serve Since Evolution Markets was founded in 2000, we have received 109 awards for excellence in brokerage from Environmental Finance and Energy Risk Magazines. Below you will find a sample of our most recent awards from 2009. For the full list our awards, please visit Magazine Customer Survey Magazine Annual Ranking 2009 2009 Best Broker, Options Best Broker, U.S. Coal Best Broker, Secondary Market (i.e. issued CERS/ERUs) Best Broker, U.S. Renewable Energy Certificates Best Broker, North American Mandatory Markets (e.g. RGGI) Best Broker, CERs , Primary Best Broker, Offsets Best Broker, CERs, Secondary * Best Broker, SO2 Best Broker, U.S. Voluntary Emission Reductions Best Broker, U.S. Weather Derivatives * Best Broker, NOx (Reclaim) Best Broker ERCs Specialist Broker of the Year (2008) Best Broker, Renewable Energy Markets House of the Year: European Emissions (2007) Best Broker, Weather Risk Management, North America House of the Year: Weather / Emissions (2004) Best Broker, Catastrophe Risk * Best Broker, NOx Carbon Market Awards * 2005: Best Broker Best Broker, Weather Risk Management, Europe Best Broker, Weather Risk Management, Asia * Evolution Markets Inc.runner-up *category – Proprietary & Confidential
  7. 7. ELEMENT MARKETS US Emissions House of the Year - 2010 Launched in 2005, Element Markets has become the largest integrated project development and environmental credit marketing company in North America • Experienced in developing wind, solar, and methane projects • Current renewable pipeline represents >17,000 MMBtus / day of methane and ~100 MWs of solar PV (rooftop and utility scale) • Partnered with International Power to advance Texas and Midwest wind assets • Manage 18 projects on Climate Action Reserve, including the first listed Organic Waste project Element Markets Business Units Renewable Energy Group Greenhouse Gas (GHG) and Emissions Services Wind/Solar/Biomass Credit Marketing GHG Offset Projects Credit Marketing Project Types Marketing Compliance Solutions • Methane (Landfills, Coal Mines, Agriculture) • Asset Management • Solar • Credit Aggregation • Wind • Credit Monetization
  8. 8. GREENHOUSE GAS AND EMISSIONS GROUP GHG and Emissions Marketing Development Projects • All North American GHG Markets • Methane (Landfills, Organic Waste) • All Regional and federal emissions • Composting and Organic Waste Digestion markets • Coal Mine Methane • Other GHG Mitigation GHG and Emissions Markets EM Project Pipeline Locations Awards and Distinctions • #1 Mandatory GHG Credit Dealer (2009) - Energy Risk • #1 Voluntary GHG Credit Dealer (2008, 2009) – Energy Risk • Runner-Up, Best Trading Company, N.A. Mandatory GHG (2009) – Env. Finance • Top 5 Developer, North American Voluntary Greenhouse Gas Markets (2009) – Point Carbon • #1 SO2 Dealer (2009) – Energy Risk • #1 NOx Dealer (2009) – Energy Risk • Best Trading Company, SO2 Emissions Credits (2008, 2009) – Environmental Finance
  9. 9. RENEWABLE ENERGY GROUP Renewable Energy Marketing Project Development • All compliance and voluntary markets • Solar Photovoltaic • All Energy Efficiency markets • Biomethane to Energy • Transacted ~19 million RECs to date • Wind State RPS and Goals EM Project Pipeline Awards and Distinctions • #1 US Renewable Energy Credit Dealer (2008, 2009) – Energy Risk • Best Trading Company, North American RECs (2009) – Environmental Finance • # 2 Best Solar Power Investor (2009) - Energy Risk • # 3 Best Wind Power Investor (2009) – Energy Risk
  10. 10. CONTACT INFORMATION Randy Lack, Chief Marketing Officer Element Markets, LLC 3555 Timmons Lane, Suite 900 Houston, TX 77027 Office: 281-207-7213 Fax: 281-207-7211
  11. 11. EMA Activities • Market Oversight committee formed • Outreach to EMA members and others: webinar held on July 7, featuring EMA members, IETA member and 2 Senate Ag Committee staffers • Recording available on-line at • Added representatives from IETA, CERP and ABA to Committee • Outreach to CFTC staff • Dialog on regulatory issues • Expect to be a resource for section 750 inter-agency report on carbon markets • Submitted comments on ANPR by CFTC and SEC on Dodd-Frank bill and follow-on definitions of what constituted a SWAP [copy available] • Allowances, RECs and offsets addressed • Not a “security” • Not, in and of themselves, a SWAP • Support for “end-user exemption” • Oversight Committee open for further participation. • Further information available by contacting or at Sonnenschein exhibit area
  12. 12. The Issues for the Panel • What has been the EU experience with respect to volatility and efficiency of carbon markets? • What will role of auctioning be on rice discovery? • How does further market oversight play a role? Will WCI criteria impede or advance CFTC rules? • Will new US and EU provisions eliminate carbon trading or just push everything onto exchanges? • Are the likely volumes efficiently put onto exchanges? • How will international offsets trade in relation to domestic offsets? Will REDD offsets be at a premium, or a discount?
  13. 13. Conclusion • “Markets” viewed with suspicion – by right and left • Any better alternative? • Tax grants and lobby? • Command and control? • Many activities now underway in Congress • Become engaged and participate