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An Introduction:Carbon Finance & The Voluntary Carbon

Markets as a Conservation Tool

Katherine Hamilton

Ecosystem Marketplace

July 31, 2007

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About the Ecosystem Marketplace“Bloomberg” for Emerging Markets in Ecosystem Services:

Carbon Markets , Water markets, Biodiversity Markets, Easements and Other Conservation TransactionsConsistent, accurate information is critical for building these ecosystem service markets

Daily news updates, feature articles, regular e-mail newsletters, and market watch

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EU ETSVol: 1,101 Mt (CO2e)

Value: $24,357 MCCX

Vol: 10 MTValue: $38 M

CDM/JIVol: 450 MtCO2eValue: $ 4,813 M

Voluntary Offset

13.4 + MT$100-250M

NSW GGAS20MT

$225 M

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Source: New Forests/Ecosystem Marketplace, World Bank

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Carbon Markets: Tool for reducing greenhouse emissions by providing economic incentives for reductions

Project based credits:emissions credits are the result of a specific carbon offset project.

Ex. Kyoto’s CDM & JI, Voluntary Offset Markets

Allowance based credits: are created and allocated under a cap- and- trade regime.

Ex. EU- ETS Trading Scheme; Chicago Climate Exchange

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Clean Development Mechanism & Voluntary Offset Markets

CDM:

• Kyoto Protocol link to developing countries

• Driven by regulation

• Project methodologies must be approved by Executive Board

• 450 Million tCO2e transacted in 2006

Voluntary Offset Markets:

• Projects across the globe

• Driven by corporate responsibility, anticipation of regulation, and individuals

• No unified system for quality control… evolving standards

• 13.4 to 30 Million tCO2e transacted in 2006

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Voluntary Over theCounter Offset Market: Chicago Climate

Exchange:

Off-Grid15%

Mixed / Other3%

Forestry37%

REC17%

Industrial Gas20%

Methane3%

EE5%

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A Potential Tool for Avoided Deforestation

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Fertile Ground for Micro Projects

Medium (14)22%

Mixed (3)8%Micro (19)

4%

Small (12)10%

Large (12)22%

Very Large (7)

34%

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Tree Huggers: Voluntary Carbon Markets Embracing Forestry

Can potentially avoid CDM cost hurdles

Space for innovation& testing methodologies

Demand for “Charismatic Carbon”in voluntary markets

Forestry easy for consumers to understand

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What do buyers value?

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Who is Driving this Market?

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Source: Indymedia.org.uk, 2007

Carbon Neutral Co. in the line of fire

225225225

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Voluntary carbon in the mainstream media limelight…

Financial Times Industry caught in carbon ‘smokescreen,’April 25, 2007

Business Week Another Inconvenient Truth, March 23, 2007

New York Times Carbon-Neutral Is Hip, but Is It Green? April 29, 2007

Christian Science MonitorDo carbon offsets live up to their promise?, January 10, 2007

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Despite critics on two fronts (LULUCF & voluntary offsetting), trees still standing tall…

Dell Computer: “Plant a Tree for Me” customers program

Home Depot: Offsetting flights and headquarters

Delta Airlines customer & employee program

William McDonough and Partnersoffsetting flights and headquarters

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Description Focus on Env. & Social Benefits

Reporting/Registration

IncludesLULUCFMethodology?

GeographicalReach

Gold Standard Certification for offset projects & carbon credits Yes VER registry in

development Energy projects

International

The VCS Certification for offset projects & carbon credits No Use Bank of

New York; other registry TBD

Yes, Methodology TBD

International

CCB Standards Certification program for offset projects Yes Projects on

Website OnlyLULUCF

International

CCX Internal system for CCX offset projects & CCX carbon credits No Registry

Incorporated w/ trading platform

Yes International

Plan Vivo Methodology and certification for offset projects & carbon credits Yes No Community

based agro forestry

International

VER+ Certification program for offset projects, carbon credits & carbon neutral products No TÜV SÜV

Blue RegistryIncludes a JI or CDM methodology

International

Social Carbon Certification for offset projects & carbon credits Yes Creating its

own registry system

Reforestation & Avoided deforestation

South America & Portugal

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Questions?

Contact: Katherine Hamilton

Email: Khamilton@

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ecosystemmarketplace.com

Tel: 1 (202) 298- 3007