This document provides information about the Chicago Climate Exchange (CCX), a financial institution that administers North America's only legally-binding cap and trade market for reducing, registering, and trading greenhouse gas emissions. It notes that CCX membership includes leaders from various sectors representing 17% of the Dow Jones Industrials, such as Bank of America, DuPont, Intel, and IBM. The document also discusses the growth in trading volumes on the CCX and other related exchanges from 2006 to 2008 and presents information on proposed U.S. climate change legislation and the 2008 U.S. presidential candidates' climate plans.

1. A global financial institution advancing social, environmental and economic goals
© 2008 Chicago Climate Exchange, Inc Reproduction or quotation of this material is expressly forbidden without the consent of the author

2. Climate Exchange Plc (
g (CLE.L)
)
European Climate Exchange®
Leading d i i h f E b di d E i i T di
– L di derivatives exchange for European carbon credits under EU Emissions Trading
Scheme (EU ETS)
**EUA Futures and Options
**CER Futures and Options
Chicago Climate Exchange®
– North America’s only Greenhouse Gas emissions allowance trading system. This CFTC
Exempt Commercial Market is members-only.
**Spot CO2 contract
Chicago Climate Futures Exchange®
– A CFTC designated contract market that offers standardized and cleared futures and
g
options contracts on emission allowances and other environmental products.
** SO2 futures and options, NOx futures, CFI Futures, CER futures, IFEX futures,
ECO Index Futures
© 2008 Chicago Climate Exchange, Inc Reproduction or quotation of this material is expressly forbidden without the consent of the author

3. Dr. Richard Sandor, Founder and Chairman
,
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4. 1st Half Exchange Volume Growth
g
1,200,000
1,000,000
800,000
,
ontract Volume
2006
600,000 2007
2008
Co
400,000
200,000
0
CCX CCFE ECX
Exchange
© 2008 Chicago Climate Exchange, Inc Reproduction or quotation of this material is expressly forbidden without the consent of the author

5. Full Year Exchange Volume Growth
g
2,000,000
1,800,000
1,600,000
1,400,000
ract Volume
1,200,000
2006
1,000,000 2007
Contr
2008
800,000
600,000
400,000
200,000
0
CCX CCFE ECX
g
Exchange
*As of close 09/23/2008
© 2008 Chicago Climate Exchange, Inc Reproduction or quotation of this material is expressly forbidden without the consent of the author

6. ECX Exchange Volume Comparisons
g p
EUA and CER Volumes Excahanges
July 2008
y
ECX / ICE Nordpool
91.4% 2.7%
Bluenext
3.6%
EEX
2.1%
Green Exchange
0.2%
ECX / ICE Nordpool Bluenext EEX Green Exchange
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7. CLE.L 2008 Performance*
© 2008 Chicago Climate Exchange, Inc performance is not an material is expressly forbidden without the consent of the author
*Past Reproduction or quotation of this indicator of future results

8. Exchange Sector 2008 p
g performance*
© 2008 Chicago Climate Exchange, Inc performance is not an material is expressly forbidden without the consent of the author
*Past Reproduction or quotation of this indicator of future results

9. Wealth creation in the U.S. since WW II
1950’s Manufacturing
1970’s Commodities
1980’s Interest Rate Derivatives, Mortgage –backed
Securities, Junk Bonds
1990’s Information
2000’s Air and Water
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10. Regulatory Tools
g y
Tax
Command and Control
Cap and Trade
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11. Impact of Trading on SO2 Pollution
- The US Acid Rain Program’s annual benefits in the year 2010 are expected to be $122 billion (Yr. 2000 $)
- Based on EPA’s latest air quality trends data the national composite average of SO2 annual mean ambient
concentrations decreased 48 percent between 1990 and 2005.
11 Chicago Climate Exchange, Inc
© 2008 Reproduction or quotation of this material is expressly forbidden without the consent of the author

12. European vs. Potential US Carbon Market*
p
* Under Lieberman/Warner Bill
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13. Market Observations
quot;I can certainly see carbon becoming the biggest of any derivatives product in
I
the next four to five years. And that would of course mean overtaking T-
bills [Treasury] and any contract that is out there right now.quot;
Commissioner Bart Chilton, US Commodity Futures Trading Commission,
Financial Times, March 10, 2008
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14. Cap and Trade Legislative Activity
p g y *
• Boxer Lieberman Warner
Boxer-Lieberman-Warner • Kerry-Snowe
Kerry Snowe
•Lieberman-Warner Climate Security Act of 2008 – 10/18/2007 •Global Warming Pollution Reduction Act – 2/1/2007
•Calls for 71% cap below 2005 in 2050 •Calls for 62% cap below 1990 in 2050
•Recognizes Early Action •Recognizes Early Action
• Bingaman-Specter • Olver-Gilchrest
•Low C b E
L Carbon Economy A t – 07/11/2007
Act •Climate Stewardship Act – 1/22/2007
Cli t St d hi A t
•Calls for 1990 level emissions in 2030 •Calls for 70% cap below 1990 in 2050
•Recognizes Early Action •Recognizes Early Action
• McCain-Lieberman • Waxman
•Climate Stewardship and Innovation Act – 01/12/2007 •Safe Climate act of 2007 – 3/20/2007
•Calls for 60% cap below 1990 in 2050
C ll f b l 20 0 C ll f l l
•Calls for 1900 level in 2020
•Recognizes Early Action •Recognizes Early Action
• Sanders-Boxer
•Global Warming and Pollution Reduction Act – 01/16/2007
•Calls for 80% cap below 1990 in 2050
•Recognizes Early Action
© 2008 Chicago Climate Exchange, Inc Reproduction orCenter of this Global Climate Change
*From the Pew quotation For material is expressly forbidden without the consent of the author

15. 2008 presidential campaigns proposed climate change plans*
Obama McCain
Climate Change Climate Policy should:
Principles •Be built on scientifically-sound, mandatory emission reduction targets and timetables
•Utilize a market-based cap and trade system
•Include mechanisms to minimize costs and work effectively with other markets
•Spur the development and deployment of advanced technology
•Facilitate international efforts to solve the problem
Cap and Trade •Implementation of an economy-wide •Implement a cap-and-trade system regulating GHG emissions from the electric
Program cap-and-trade system power, transportation fuels, commercial business and industrial business sectors
•Require 100% of pollution credits to be (small business would be exempt)
auctioned to ensure that all industries pay •Permit the purchase of offsets; but the fraction of the reductions permitted via offsets
for every ton of emissions they release would decline over time.
rather than giving valuable emission •Establish commission to recommend the percentage of “free” allowances and the
p g
rights away to companies on the basis of percentage to be auctioned, and develop a schedule for transition from allocated to
their past pollution maximum auctioned allowances (program would include early action allowances).
Cost Mitigation •McCain’s plan will use a portion of the eventual auction proceeds to establish the
Measures following cost mitigation measures:
–Emissions trading program
–Program f “banking” and “b
P i ” f it
for “b ki ” d “borrowing” of permits so th t emission reductions
that i i d ti
may be accelerated or deferred to more economically efficient periods.
–Integrate US trading system with other international markets
–Establish a “strategic carbon reserve” as a national source of permits during
periods of economic duress
Greenhouse Gas 2050: 80% below 1990 levels by 2050 2012: 2005 levels (18% above 1990)
Emissions Reduction 2020: 1990 levels (15% below 2005)
Targets 2030: 22% below 1990 levels (34% below 2005 levels)
2050: 60% below 1990 levels (66% below 2005 levels)
*From campaign websites www.barackobama.com; www.johnmccain.com
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16. 2008 presidential campaigns proposed climate change plans*
Obama McCain
Technology •A small portion of the receipts generated •A portion of the eventual auction proceeds will be used to develop and deploy
Development and by auctioning cap-and-trade allowances advanced energy technologies, including carbon capture and sequestration, nuclear
Deployment ($15B per year) used to support the power and battery development.
Mechanisms development of: •Funds will also be used to provide financial backing for a Green Innovation Financing
Clean Energy and Transfer (GIFT) program to facilitate commercialization.
Energy Efficiency improvements •Will establish a permanent tax credit equal to 10% of wages spent on R&D to provide
Next Generation Biofuel an incentive to innovate and remove uncertainty to energy technology development.
Clean Energy Vehicles
•Remaining receipts used for rebates and
other transition relief
•Extend the renewable energy production
tax credit (PTC) for 5 years
•Establish the “Clean Technologies
g
Deployment Venture Capital Fund”
Partner with existing investment
funds and National Laboratories to
ensure promising technologies move
beyond the lab to commercialization.
International Climate •US leadership in United Nations Negotiations
Change Efforts •Capturing the market on low-carbon energy production and exports to developing
countries – including government incentives and partnerships for sales of clean
technology to developing countries.
•Providing incentives for rapid participation by India and China while negotiating an
agreement with each.
g
*From campaign websites www.barackobama.com; www.johnmccain.com
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17. Presidential Support in 2009?
pp
“I know John McCain well enough to know that this is one of the first
issues he would turn to if he wins on 4 November,” said James Woolsey,
McCain’s i d i “H
M C i ’ senior energy advisor. “He would move out smartly toward cap-
ld t tl t d
and-trade and getting the US in the leadership position in international
(climate change) negotiations.”
James Woolsey, former director CIA and current foreign policy and energy
advisor to John McCain, Point Carbon, September 12, 2008
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18. Presidential Support in 2009?
pp
“As part of my cap-and-trade incentives, I will also propose to include the
purchase of offsets from those outside the scope of the trading system.
This will broaden the array of rewards for reduced emissions, while
y ,
also lowering the costs of compliance with our new emissions
standards. Through the sale of offsets, and with strict standards to assure
that reductions are real, our agricultural sector alone can provide as much
as forty p
y percent of the overall reductions we will require in g
q greenhouse g
gas
emissions. And in the short term, farmers and ranchers can do it in some of
the most cost-effective ways”
Senator John McCain (R AZ) May 12, 2008
(R-AZ), 12
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19. Presidential Support in 2009?
pp
“I will implement a market-based cap-and-trade system to reduce carbon
emissions by the amount scientists say is necessary: 80% below 1990 levels
by 2050. ill d i i i
b 2050 I will start reducing emissions i immediately b establishing strong
di l by bli hi
annual reduction targets with an intermediate goal of reducing emissions to
1990 levels by 2020. I will restore U.S. leadership in strategies for
combating climate change and work closely with the international
community. We will re-engage with the U.N. Framework Convention on
Climate Change, the main international forum dedicated to addressing the
climate change problem.
problem.”
Senator Barack Obama (D-IL), Science Debate 2008, September 20, 2008
© 2008 Chicago Climate Exchange, Inc Reproduction or quotation of this material is expressly forbidden without the consent of the author

20. Presidential Support in 2009?
pp
“To deal directly with climate change, something we failed to do in the last
To change
energy bill, we should use a market-based strategy that gradually reduces
harmful emissions in the most economical way…Right here in Chicago, the
g g y
Chicago Climate Exchange is already running a legally binding greenhouse
g g y gg
gas trading system.”
Senator Barack Obama (D-IL), April 3, 2006
(D-IL) 3
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21. What is the Chicago Climate Exchange?
g g
Chicago Climate Exchange® (CCX ®) is a financial
institution that administers North America s only
America’s
legally-binding cap and trade market for reducing,
registering and trading greenhouse gas emissions.
© 2008 Chicago Climate Exchange, Inc Reproduction or quotation of this material is expressly forbidden without the consent of the author

22. CCX® Members are Leaders in Their Sectors
22
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23. ®
CCX Membership Highlights
p g g
• Represents 17% of the Dow Jones Industrials, including:
– Bank of America
– DuPont
– Intel
– IBM
– United Technologies
g
• Represents 11% of the Fortune 100, including:
– Ford
– Motorola
– Safeway
– International Paper
– Honeywell International Inc.
• Represents 20% of the largest CO2 emitting utilities in the US, including:
– AEP
– Reliant
– Allegheny Energy
g y gy
– DTE
– NRG Energy
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24. CCX® Market Architecture (2003-2010)
( )
Phase I: Members made legally binding commitments to reduce or trade 1% per year below baseline from 2003-
2006, for a total of 4% below baseline.
Phase II: M b
Ph II Members make a l
k ll binding it
legally bi di commitment t reduce t 6% b l
t to d to below bbaseline b 2010
li by 2010.
Baseline = Avg. emissions from 1998-2001, or emissions in 2000 (Phase II Only)
24 Chicago Climate Exchange, Inc
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25. CCX Emission Offset Types
yp
Verified offset projects sequester or eliminate GHGs to
p j q
earn CFI contracts sold on CCX electronic platform to
CCX Membership.
Current pre-defined offset categories:
• Methane destruction: Landfills, agricultural operations and
coal mines
• Carbon sequestration: forests, soils (conservation tillage,
grassland planting, rangeland management)
• Ozone depleting substance destruction
• Energy efficiency
• Renewable energy
• Others case b case
h by
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26. CCX® is the Largest Volume Carbon Market
g
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27. CFI Historic Volumes (metric tons)
®
100
90
80
70
etric tons)
60
Options
50 Futures
Million (me
Cash
40
30
20
10
0
2004 2005 2006 2007 2008*
*As of close 09/23/2008
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28. ® ®
CCX CFI Prices
$8.00
$7.50
$7.00
$6.50
$6.00
$5.50
$5 50
$5.00
$4.50
Price
$4.00
$3.50
$3 50
$3.00
$2.50
$2.00
$1.50
$1.00
February 5, 2008
$0.50 Super Tuesday
$0.00
04
04
04
04
05
05
05
05
06
06
06
06
07
07
07
07
08
08
08
08
03
04
04
05
05
06
06
07
07
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
/20
/20
/20
/20
/20
/20
/20
/20
/20
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
2/2
/12
/12
/12
/12
/12
/12
/12
/12
/12
2/1
4/1
6/1
8/1
2/1
4/1
6/1
8/1
2/1
4/1
6/1
8/1
2/1
4/1
6/1
8/1
2/1
4/1
6/1
8/1
12
10
12
10
12
10
12
10
12
*As of close 09/23/2008
© 13 Chicago Climate Exchange, Inc Reproduction or quotation of this material is expressly forbidden without the consent of the author
2008

29. “Super Tuesday Effect”
p y ff
Analysts attributed the increased activity to US political developments, as
the CFI price rose right after Super Tuesday, the US primary election in
which Arizona Senator John McCain pulled ahead of rivals toward the
Republican presidential candidacy. “Look at when the prices increased –
they basically went up from $2.75 before Super Tuesday to over $4.50 by 7
h b i ll f $ b f d $ b
February. McCain was the one candidate on the Republican side who
clearly favoured cap-and-trade,” said Bruce Braine of power company
AEP,
AEP a CCX member. The correlation of CCX’s price and volume surge
member
with election news is “too coincidental to be a coincidence,” he added.
Point Carbon 02/19/08
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30. Compliance, Pre-Compliance and CCX Markets *
$40.00
$35.00
$30.00
$25.00
EUA
$20.00 AUS
CCX
$15.00
$10.00
$5.00
$-
Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08
*Source for AUS: Point Carbon
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31. Contact Information
Rob McAndrew Megan Morgan
rmcandrew@theccx.com mmorgan@theccx.com
312.229.5124 312.229.5139
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