Chicago Climate Exchange ®, Inc. © 2008 Chicago Climate Exchange, Inc. Jeff Huang Vice President July 2009 1 Reproduction or quotation of this material

Chicago Climate Exchange®, Inc.© 2008

Chicago Climate Exchange, Inc.

Jeff HuangVice President

July 2009

1 Reproduction or quotation of this material is expressly forbidden without the consent of the Author.


CCX-Related Exchanges

Chicago Climate Exchange ™ (CCX) - Voluntary• Launched 2003 with 14 members, now 450+ members• Self-Regulatory Service Provider: FINRA

European Climate Exchange ™ (ECX) - Mandatory• Markets Served: EU ETS, Kyoto Protocol• FSA-regulated futures market for European CO2 Allowances• Launched by CCX April, 2005 – 80-90% of EU exchange traded volume

Chicago Climate Futures Exchange ™ (CCFE) – Voluntary and Mandatory• Markets Served: US Clean Air Act, CCX, Kyoto Protocol, EU ETS, RGGI, CCAR• CFTC-regulated futures exchange • Launched by CCX in December 2004

Montreal Climate Exchange ™ (MCeX) – Mandatory • Market Served: Kyoto Protocol• Joint venture with the Montreal Bourse

Tianjin Climate Exchange ™ (TCX) – Potentially Voluntary and Mandatory• Joint venture with China National Petroleum Corporation and the City of Tianjin

India Climate Exchange™ – Potentially Voluntary and Mandatory• (In development)

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CCX-US (Voluntary, Legally-Binding Emissions Reduction Schedule)

Phase I (2003-2006): Members made legally binding commitments to reduce/trade to 4% below baseline by 2006

Phase II (2007-2010): Members make legally binding commitment to reduce/trade to 6% below baseline by 2010

** Baseline: Average emissions from years 1998-2001 (Phase I), emissions from year 2000 (Phase II)

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**

Reproduction or quotation of this material is expressly forbidden without the consent of the Author.


CCX Registry

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Bids and offers

Completed trades(each contract is 100mt CO2)

CCX Trading Platform

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CCX Membership – Economy WideMost Stringent GHG Reduction Commitment in U.S.


Key Sectors• Electric Power Generation• Diversified Manufacturing• Pulp and Paper • Financial Institutions• Electronics and Technology• Agricultural Products• Electronics• Chemicals• Environmental Services• Universities & Colleges

A Selection of Members

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CCX® Membership Highlights

• Represents 17% of the Dow Jones Industrials, including:– Bank of America– DuPont– Intel– IBM– United Technologies

• 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 Mirant– Reliant Dynegy– Allegheny Energy TECO– DTE Alliant– NRG Energy American Electric Cooperative, Inc

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Comments of IBM

“It's because by participating in the Chicago Climate Exchange, whichreally governs IBM's own business operations and our company's owncarbon footprint, we are better able to understand the entire arena ofcreating an inventory of carbon emissions, accounting for them in an audit ready manner, presenting them to an exchange so they can be verified and considered to be tradable and how one does and doesn't make money on an exchange”

Wayne BaltaVP, Corporate Environmental Affairs

IBM September 26, 2007



CCX Size Relative to National GHG Trading Coverage


600

453 445

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246

209 196170

152133 130

87 8669 59 56 45 37 31 31 31 29 23 21 13 9 8 3 3

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CCX includes more industrial emissions under its legally binding cap than any single country in the world

Source: EU ETS Phase II National Allocation Plans

[RGGI][AB32]

CCX Member-wide emissions are equivalent to:•15% of U.S. stationary emission sources •25% of emissions covered under EU ETS


Liquidity Providers

Liquidity Provider: Entity or individual who trades on the Exchange for purposes other than complying with the CCX emissions reduction schedule, such as market makers and proprietary trading groups.

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Selected Liquidity Providers

Reproduction or quotation of this material is expressly forbidden without the consent of the Author.


CCX® CFI

® Cash/Futures/Options

Based on U.S. Voluntary, Legally-Binding Program

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Futures

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*CFI Futures ContractLaunched August 2007

**CFI Options ContractLaunched February 2008

*As of 7/16/09


CCFE® Market Dynamics

• CFTC Designated Contract Market

• Clearing services provided by Clearing Corporation

• Market Surveillance provided by the National Futures Association (NFA)

• CCFE Products offer:

– Standardized contracts

– Price transparency / price discovery

– Anonymity

– Elimination of counterparty credit risk

– Leverage benefits

• Market hours: 7:00 am to 3:00 pm CST


CCFE ProductsUS Emissions – US EPA Clean Air Markets• Sulfur Financial Instrument® (SFI ®) Futures and Options• Nitrogen Financial Instrument™ - Ozone Season (NFI™ -OS) Futures• Nitrogen Financial Instrument™ - CAIR Annual (NFI™ -A) Futures and OptionsUS Carbon Products• Regional Greenhouse Gas Initiative (RGGI) Futures and Options• Carbon Financial Instrument ® (CFI ®) Futures and Options• U.S. Carbon Financial Instrument (CFI-US®) Jan‘13–Dec ‘15 Futures & Options • California Climate Action Reserve Tons (CCAR-CRT®) Futures and OptionsEquity-Index Products• ECO-Clean Energy Index (ECO) Futures• Dow Jones Sustainability World Index (DJSI-W) Futures *IFEX™ Insurance • U.S. Tropical Wind ($10, $20, $30, $40 and $50 Billion)• Florida Tropical Wind ($10, $20, $30, $40 and $50 Billion)• Gulf Coast Tropical Wind ($10, $20, $30, $40 and $50 Billion)Renewable Energy Products• New Jersey Renewable Energy Certificate (REC-NJ) Futures • Connecticut Renewable Energy Certificate (REC-CT) Futures • Massachusetts Renewable Energy Certificate (REC-MA) Futures • Voluntary Renewable Energy Certificate (REC-V) Futures

"Dow Jones, World Sustainability IndexSM" are service marks of Dow Jones & Company, Inc. Dow Jones has no relationship to the Chicago Climate Futures Exchange, other than thelicensing of the Dow Jones World Sustainability Index and its service marks for use in connection with the Dow Jones World Sustainability Index Futures products.

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Timeline of CCFE Product Launches

Launch Product

December 2004 SFI Futures

February 2007 NFI-OS Futures

April 2007 SFI Options

July 2007 ECO-Clean Energy Index Futures

August 2007 CFI Futures

September 2007 NFI-A Futures

October 2007 IFEX Futures

February 2008 CFI Options

March 2008 NFI-A Options

August 2008 RGGI Futures & Options

November 2008 DJSI Futures

November 2008 CFI-US Futures

December 2008 CFI-US Options

February 2009 CCAR-CRT Futures & Options

April 2009 REC Futures (NJ, CT, MA & Voluntary)


CCFE® Clearing Members


CCFE® Market Growth

• Volume Growth:

• 2005 - 171 contracts

• 2006 – 28,924 contracts

• 2007 – 283,758 contracts

• 2008 – 484,320 contracts

• 2009 YTD – 674,733 contracts

*as of 6/5/09


CCFE® Average Daily Volume Growth Since 2007


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20,000

40,000

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120,000

140,000

160,000

RGGI Futures NFI-OS Futures

IFEX ECO-Index Futures

CER Futures and Options CFI Futures and Options

NFI-A Futures and Options SFI Futures and Options

CCFE® Open Interest Growth Since 2006

*as of 6/5/09


CCFE Futures Platform


CCFE Options Platform


Current Active U.S. Carbon Markets

• Government Mandated – Regional Greenhouse Gas Initiative (RGGI)• 10 Northeastern States

• 188 million ton cap – stabilization of emissions through 2014

• Voluntary, legally binding – CCX• 450 Members

• Approx 600 million tons under cap

• 6% Reduction of emissions by 2010 from 2000 levels

• Voluntary Offset Standards• Chicago Climate Exchange (CCX)• California Climate Action Registry (CCAR) • Voluntary Carbon Standard (VCS)• Gold Standard


RGGI Futures & Options• Physically deliverable futures contract (and European style options on futures)

for Regional Greenhouse Gas Initiative Allowances – the first government-mandated CO2 emissions trading program in the U.S

• Each contract represents 1000 RGGI allowances, which represent 1,000 short tons of CO2

• Launched: August 2008

• Tick Size: $0.01 ($10.00 per contract)

• Transaction Fees: $1.60 per contract per side (Member); $2.00 (Non-Member)

• Current Margin requirement: $450 per contract

• Market Highlights:

• Current Open Interest* 31,441 contracts• Over 237,717,000 allowances traded on CCFE

*as of 5/28/09


RGGI: 1st Mandatory Carbon Market in U.S. Exhibits Dramatic Growth

• 1st RGGI Auction: 12,565,387 Allowances• 2nd RGGI Auction: 31,505,898 Allowances• 3rd RGGI Auction: 33,689,278 Allowances• 4th RGGI Auction: 30,887,620 Allowances• Total Auctioned: 107 million Allowances• RGGI Derivatives Traded on CCFE: 369 million Allowances

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20,000

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June

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5,000

10,000

15,000

20,000

25,000RGGI Options Volume

RGGI Futures Volume

Avereage Daily Volume

*As of 6/8/2009


ACES

On June 26, the U.S. House of Represntatives passed the “American Clean Energy and Security Act” by a vote of 219-212. If Enacted, ACES would establish an economy wide cap-andtrade program for greenhouse gases (GHGs) beginning in 2012.

Absolute Reduction Targets • 3% by 2012 from 2005 level• 17% by 2020 from 2005 level• 42% by 2030 from 2005 level • 83% by 2050 from 2005 level

Renewable Energy Standard (RES)• Electric utilities must meet 20% of electricity demand through renewable energy and energy

efficiency by 2020

Economy-Wide Coverage• 2012: 67% of U.S. emissions covered• 2014: 78% of U.S. emissions covered• 2016: 85% of U.S. emissions covered

Offsets• 2 billion mt allowed per year• 1 of 2 billion mt for domestic offsets• 1 of 2 billion mt for international offsets


ACES Reduction Schedule(Allowance Allocated)


CCFE CFI®-USMandatory U.S. GHG Allowances

As of November 2008: CCX Carbon Financial Instruments with January 2013 expiration and later require delivery of U.S. Federal GHG Emission Allowances, called CFI®-US

CFI®-US is the first tool for directly hedging economic exposure associated with:

• Whether a U.S. Federal Cap-and-Trade is established

• When such a U.S. Federal Cap-and-Trade is established

• The prices of tradable emission allowances established under such a Federal Cap-and-Trade

11/19/08: First Trades Futures contracts that expire in December 2013, 2014 and 2015 were traded withprices ranging from $11.75 to $15.00 per metric ton



European Climate Exchange ™ (ECX)

Reproduction or quotation of this material is expressly forbidden without the consent of the Author.27

• Launched by CCX April 2005, based in London• U.K. FSA-regulated futures exchange• Futures and Options on:

• European Union Allowances (EUAS)• UN Certified Emission Reductions (CERs)

• Commands 90-99% of exchange traded futures and options volume

• Traded over 5 billion metric tons to date


ECX Monthly Volumes (EUAs and CERs)


ECX Open Interest


CER/EUA Market Share


EUA/CER Historical Prices


国际环境交易在中国正式启动

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CCX Activities in China

May 2006: First Chinese Companies join CCX

August 2006: CSRC requests consultancy with CCX CEO for China BondFutures Market

July 2007: Guanghua School of Management invites Dr. Sandor invited to joininternational advisory council

Fall 2007: MOST-UNDP invites CCX to consult on development of carbonmarket to meet Millennium Development Goals

January 2008: CCX and CNPCAM sign MOU for JV in China

April 2008: China Quality Certification Center (CQC) becomes CCX accredited verifier

July 2008: CCX, CNPCAM, City of Tianjin form Tianjin Climate Exchange

September 2008: TCX Opening Ceremony at TCX HQ

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Key Goals in 11th Five Year Plan

Sulfur Dioxide (SO2)

Reduce 10% below 2005 levels by 2010

Water Quality - Chemical Oxygen Demand (COD)


Energy Intensity


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Tianjin Climate Exchange (TCX)


Joint Venture with:• CNPC Asset Management• City of Tianjin• Chicago Climate Exchange (CCX)

Mission: • Implement environmental goals of 11th Five Year Plan• Address national and international emissions and energy management challenges,• Improve environmental quality and seek balance between environmental/economic benefits

Official Sanction: Tianjin Climate Exchange (TCX) will implement the BinhaiComprehensive Reform Plan, approved on March 13, 2008 by the State Council ofthe People’s Republic of China (PRC) to establish an emissions trading market inTianjin Binhai New Area.


TCX Initial Product Areas

Sulfur Dioxide (SO2) Initial Product/Program Area

11 FYP: Reduce 10% below 2005 levels by 2010

Water Quality - COD – Initial Product/Program Area


Energy Intensity - Initial Product/Program Area


Voluntary GHGs

CDM CERs

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Tianjin Climate Exchange – Opening Ceremony


Documents

Chicago Climate Exchange ®, Inc. © 2008 Chicago Climate Exchange, Inc. Jeff Huang Vice President July 2009 1 Reproduction or quotation of this material