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 Solutions will be participating in the upcoming Carbon Expo Conference hosted by the International Emissions Trading Association (IETA). Taking place May 7-9, 2008 in Cologne, Germany, leaders in today’s global CO² market will gather to discuss the latest innovations in carbon emissions mitigation and climate development.

To schedule a meeting with World Energy at Carbon Expo, Booth F-26 in Hall 11.1, please contact:

Ken Bertino
Senior Vice President, Environmental Markets
World Energy
kbertino@worldenergy.com
+1.215.221.4684

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’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!

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 Guardian discuses JPMorgan’s acquisition of carbon offset firm ClimateCare, marking the first time an investment bank has outright purchased a developer of emissions-cutting projects. Other investment banks such as Citigroup, Morgan Stanley and Merrill Lynch have all entered the market by purchasing only stakes in developers.

The Associated Press takes a look at a Maryland bill that proposes an initiative to use funds generated from the state’s involvement in RGGI for electricity rate relief instead of promoting energy efficiency. This bill would repeal the Maryland Renewable Energy Fund with the Maryland Strategic Energy Investment Program, but opponents to the bill believe that investing in energy efficiency programs will save more money long-term.

According to Reuters, U.S. officials will meet this week to interpret Section 526 of the Energy Independence and Security Act, which bars large federal fuel buyers from using fuel made from coal if it contains more carbon than fuel made from crude oil. This act has hindered federal agencies, such as the Air Force, from embracing less expensive nonpetroleum fuel sources.

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.