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.

World Energy’s president and COO Phil Adams will be speaking this week at the Wall Street Green Trading Summit, the seminal New York City environmental financial market event covering carbon emissions trading and finance, renewable energy markets, cleantech VC, green hedge funds and energy efficiency financial markets.

Phil’s session is titled “REC Market Issues That Need to Be Resolved: Finding Value through the Transaction Process,” and takes place on Wednesday April 2nd at 3:00 p.m. ET. Stop by if you are attending, and if you are not, you can register 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!

Grist is featuring an interview with Phil Adams, World Energy’s President and COO, discussing the World Green Exchange launch, the current state of and the future of the carbon market. Grist’s Mark Pawlosky tapped Phil for insight on how the exchanges serving the market differ, as well as the growing number of states that are implementing renewable energy portfolio standards in the absence of a federal standard. Also discussed is the popularity of a cap-and-trade program:

Grist: A market-driven exchange solution has the unique distinction of being favored by both Democrats and Republicans, but there is growing support for a carbon tax — which its proponents claim is more equitable. Is it possible — indeed necessary — for an exchange, carbon tax, and other legislated solutions to live side by side to effectively reduce carbon emissions?

Adams: It seems to me that there should be one model in place, and given how well cap-and-trade has done with acid rain over the last couple of decades, and since it’s been adopted for Kyoto, I’m willing to believe that cap-and-trade is here to stay.

Also, World Energy’s been at Carbon Forum America in San Francisco this week. If you’re still around, we’re in booth #414, so stop by and let us know what you think about the World Green Exchange!

Today’s Globe and Mail discusses how the Canadian carbon market is taking off, with Alberta and now British Columbia having carbon legislation in place. The World Green Exchange’s auction with Verdant Energy was featured as a successful example of this growing market:

In Calgary, Blue Source Canada, formerly Baseline Emissions Management Inc., last year started marketing offsets in Alberta and has a supply of more than 10 million credits, from areas such as biomass and renewable energy. In January, it worked with World Energy Solutions Inc., which has an auction system, to help Calgary’s biomass power company Verdant Energy Ltd. sell 80,000 credits for roughly $1-million.

Also discussed is the fluctuating price of carbon due to uncertainty in the market; however, even with this uncertainty, the international market continues to expand rapidly.

We’d love to hear your thoughts on the future of the Canadian carbon market.

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

We wanted to share the Wall Street Journal’s thoughts on yesterday’s launch of the World Green Exchange. Keith Johnson, who talked with CEO Rich Domaleski, blogs about the exchange on the WSJ’s Environmental Capital blog:

Trading Places: A New Carbon Market
Posted by Keith Johnson

The increasingly crowed club of climate exchanges has a new member. The big question now: How and when will the U.S. carbon market really materialize?

World Green Exchange, an offshoot of an existing electricity-and-gas trading platform, officially launched operations Wednesday. To compete against the established, and much larger, climate-change exchanges out there, WGE brings a twist to the table: It runs auctions.

That brings buyers and sellers together directly, sort of a regulated e-Bay for trades of natural gas, electricity—or greenhouse-gas emission permits. World Energy started with electricity sales, but has been quietly selling renewable-energy certificates and “green” power since 2003, such as for states that need to ensure a certain part of their electricity mix comes from sources like wind farms.

We’d love to hear your thoughts about Keith’s take on the World Green Exchange.

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.