World Energy Solutions Administers Nation’s First Carbon Emissions Allowances Auction for the Regional Greenhouse Gas Initiative

Worcester, MA – September 30, 2008 – World Energy Solutions, Inc. (TSX: XWE) today announced it has successfully administered the first-in-the-nation auction for carbon dioxide (CO2) emissions allowances on behalf of the Regional Greenhouse Gas Initiative (RGGI). According to RGGI, Inc., 12,565,387 allowances were sold at the auction at a clearing price of $3.07 per allowance, netting the six RGGI states that offered allowances in this pre-compliance auction $38,575,783 in proceeds. The auction occurred on September 25, 2008.

In a previously released statement, Pete Grannis, Commissioner of the New York State Department of Environmental Conservation and Chair of the Regional Greenhouse Gas Initiative, Inc. said: “The 10 RGGI states have demonstrated great leadership in coming together to offer this first carbon cap-and-trade system, and the smooth completion of the initial auction is proof that the RGGI is leading the nation in the battle against climate change. RGGI’s example shows that an open and competitive carbon market can be implemented.” (The complete RGGI, Inc. press release can be read at: http://www.rggi.org/docs/rggi_press_9_29_2008.pdf)

Added Jonathan Schrag, Executive Director of the Regional Greenhouse Gas Initiative, Inc.: “We are grateful that the auction administered by World Energy Solutions ran flawlessly and that the monitoring conducted by Potomac Economics concluded that the auction was robust. We are very fortunate to have two top-notch firms administering and overseeing our auctions.”

“We are honored to be part of this historic and seminal event,” said Richard Domaleski, CEO of World Energy. “I am very proud of our team and the performance of our award-winning World Green Exchange®.”

Lots of greenhouse gas and carbon trading news last Friday.

The Bush Administration’s major air pollution initiative, regulating the emission of sulfur dioxide, nitrogen oxide and other major pollutants, was struck down by a federal appeals court. The ruling came as a bit of a surprise, as many utilities had been planning on entering the cap-and-trade market that the initiative would have created.

Ironically, a spokeswoman for North Carolina Attorney General Roy Cooper, who filed the suit, stated that Cooper did not agree with the ruling. When he first filed the suit, Cooper said that loopholes in the rule would actually allow emissions from neighboring states’ power plants to pollute North Carolina’s air.

In addition, on the same day the head of the EPA said the Clean Air Act was the wrong tool for regulating greenhouse gas emissions, and that Congress needed to be responsible for passing such regulations.

Also on Friday the ten Northeast and Mid-Atlantic States participating in the Regional Greenhouse Gas Initiative (RGGI) issued a preliminary release of technical materials for market participants interested in bidding in their first-in-the nation auction of carbon dioxide (CO2) allowances this September.

And earlier in the week the EU reached a provisional agreement to include airlines in their Emission Trading Scheme (ETS), beginning in 2012. Currently only 3 percent of all carbon dioxide emissions in the EU are generated by aviation. However, without new carbon emission regulations this percentage should increase over the next decade, as power producers lower their carbon emissions and air travel in the region increases.

The Globe and Mail looks at how Wall Street is gearing up for a US carbon market that could potentially rival the European market. Banks are choosing to invest in energy projects based on its potential to lower greenhouse gas emissions, as seen with Credit Suisse’s recent deal with state-owned China Huadian Group to provide financing for wind farms in Inner Mongolia in exchange for CERs. The credits make the project more attractive as an investment, as selling of the credits increases the investment’s return.

Japan’s largest utility, Tokyo Electric Power Co (TEPCO), announced that it is building its first wind farm, according to Reuters. The 11 wind turbines, total capacity of 18.37 megawatts, are scheduled to start commercial operations in October 2011, and are projected to reduce carbon emissions by 12,000 tonnes per year.

Financial News discusses the increase in the European Union carbon emissions trading from $24.4 billion in 2006 to $50 billion in 2007. Increased investing and a better market infrastructure have continually helped the market to grow, along with a rise in permit prices after the European Commission, which issues carbon dioxide quotas, allocated fewer permits.

The Wall Street Journal takes a look at the U.N. recently rejecting an increasing number of carbon offset projects as the regulations to allow for these projects to sell carbon credit continues to tighten. The discussion is centered on whether sugar plants, wind farms and other projects that would have been built without financing from the selling credits would actually allow credit buyers to fulfill their obligation to reduce emissions.

ClimateBiz reports that Merrill Lynch is launching Merrill Lynch Green and Gold, a carbon offset service that will enable companies to develop and manage climate related strategies. Supported by ICF International, the service is aimed at companies in the Americas, Asia and Europe who wish to reduce emissions with voluntary offsets.

AIG has announced that it completed $4 million in funding for carbon sequestering or reduction projects in the United States and China. Once complete, the projects will produce 620,000 metric tons of carbon offsets, which equal the amount of carbon attributed to AIG’s global operations in 2006.

World Energy will host a webinar, “Maximizing the Value of Green Credits: Using Auctions as a Price Discovery Tool,” on Wednesday, April 2, 2008 at 1:00 p.m. EDT. The complimentary webinar will feature a case study with Verdant Energy founder and former president Hal Hamilton, who recently sold 80,000 tonnes of carbon offsets through an auction on World Energy’s World Green Exchange online auction platform.

To learn the best practices on selling green credits that Hal gained from his experience, you can register for the webinar here.

The World Green Exchange has been selected to provide the Auction Implementation Services for RGGI (Regional Greenhouse Gas Initiative). RGGI chose the World Green Exchange to trade the first phase offset transactions for the ten states who, in lieu of a federal standard, are implementing self-imposed standards to lower carbon emissions. The proven forward and reverse auctions have already yielded results including the first North American online auction for carbon emission compliance.

Central to RGGI’s mission is the implementation of a multi-state cap-and-trade program with a market-based emissions trading system. Through this cap and trade initiative, the states, including Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, New Jersey, Rhode Island and Vermont, will use the World Green Exchange to offset carbon emissions.

In a statement issued by RGGI, Inc., Pete Grannis, Chair, RGGI, Inc. and Commissioner of the New York Sate Department of Environmental Conservation said, “Absent federal leadership, the Northeast and Mid-Atlantic states of RGGI are taking action to cut greenhouse gas emissions and reduce their impact on the environment Our CO2 auction will be the first in the nation and it is one that should be replicated at the federal level.”

We’d love to hear your thoughts on RGGI and its implications on the US carbon market!

Today’s Point Carbon North America Newsletter features commentary from World Energy’s Ken Ivanic on the advantages of an utilizing an online auction system in today’s markets, especially the uncertain green energy market.

In particular, Ken discusses the benefits for regulatory compliance and price discovery:

“Having a visible price discovery mechanism is of particular importance in today’s ‘green markets’ due to the uncertainty of future legislation and the lack of fungible commodities. This is especially true in voluntary carbon markets where the value is placed not only on the carbon offset, but also the protocols and standards used.”

Would you agree with such online auction benefits?

Reuters reports that Japan is looking into a compulsory cap and trade scheme instead of allowing companies to set their own targets and self-monitor for compliance. The Ministry of Economy, Trade and Industry has set up an informal panel to research a mandatory program.

The International Herald Tribune posts the AP’s interview with executive secretary of the U.N. Framework Convention for Climate Change, Yvo de Boer, discussing the role private investors play in cutting the production of greenhouse gases. De Boer predicts that private investment will soon surpass government investments to combat global warming.

We also wanted to share some additional coverage from the launch of the World Green Exchange:
Denver Post
Earthtimes
Energy Current
Restructuring Today

Today we announced the launch of the World Green Exchange, a marketplace to buy or sell green power, RECs, VERs and carbon offsets. The full press release can be found here, but here are some of the news highlights:

Since 2003, World Energy has transacted nearly 1 billion kilowatt hours of green power over its award winning World Energy Exchange. Seeing the need for an auction platform for environmental commodities, World Energy has adapted its World Energy Exchange auction technology and proven process to create the World Green Exchange, which, in the past months, has successfully completed several pioneering transactions in the renewable energy, green credit and carbon markets space:

• Green power – A reverse auction for renewable energy yielded a 17 percent greening of the State of Connecticut’s overall energy portfolio, causing the EPA to cite the state government as one of the greenest in the country.
• Renewable Energy Certificates – For a Midwest utility, World Energy sourced RECs at an 8% discount to the utility’s price target.
• Solar Renewable Energy Certificates - MMA Renewable Ventures ran a forward auction for 1500 solar renewable energy certificates, earning a premium over prevailing bid-ask prices.
• Voluntary Emission Reductions-Atmosclear, an organization committed to providing offsets to help consumers and businesses reduce their contribution to global warming, was able to sell 75,000 metric tonnes of VERs at a 20% premium in a forward auction
• Carbon emission compliance-Verdant Energy, a leading Canadian power supplier, auctioned off 80,000 metric tonnes of carbon offsets under the recently established Alberta Offset System-the first compliance-based auction of carbon offsets in North America. The forward auction yielded a price significantly higher than prices quoted to Verdant before the auction.

Point Carbon discusses the announcement with a focus on the increased results yielded with an online auctions process as opposed to bilaterally-brokered transactions, bid-ask exchanges or paper RFPs. The article also looks to the recent Alberta auction as one of the World Green Exchange’s recent successes.

We’d love to hear your thoughts regarding the exchange.

Reuters looks at the $10 billion pledge from U.S. institutional investors to go, over the next two years, toward technologies that reduce greenhouse gas emissions and to have companies disclose risks associated with climate change.

The Houston Chronicle looks at the new energy bill that House Democrats are planning on introducing. The bill will extend tax credits for renewable and clean energy programs in order to encourage wind and solar power as well as the development of plug-in hybrid vehicles. To offset these credits the bill also proposes changing the manufacturer’s deduction for oil companies and repealing tax deductions outright for the major integrated oil companies.

Another Reuters article discusses Bank of America’s creation of an environmental banking group, which is set to finance ways to conserve and reduce global warming. The announcement comes at the same time as the company’s CEO, Kenneth Lewis, called on Congress to create a carbon cap-and-trade program.

With New Hampshire still debating on if and how to participate in the Regional Greenhouse Gas Initiative (RGGI), the Nashua Telegraph takes a further look at RGGI and the regulations the initiative will put into place. The first RGGI auction is scheduled for June 2 with New York, New Jersey, Connecticut, Massachusetts and Maine participating, but New Hampshire is still debating based partly on the probable increase in electric rates. However, that increase may be offset by rebates and/or conservation.