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 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 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

Reuters discusses last night’s announcement during the State of the Union on the United States pledging to spend $2 billion over the next three years to fund clean energy tech in order to fight climate change. A large focus of this commitment is on battery power and renewable energies.

Also in Reuters, is an article discussing the Alberta carbon market. Alberta’s premier warned officials that the province cannot reduce GHGs too quickly, or it will have a large impact on the economy. However, environmentalists say that Canada cannot reduce national emissions levels without reductions in Alberta.

The Burlington Free Press talks about how several states, Vermont included, have asked the Federal Trade commission to develop guidelines for business that sell credits. The states are worried about fraud due to the “intangible nature of carbon offsets.” The other states include Arkansas, California, Connecticut, Delaware, Illinois, Maine, Mississippi, New Hampshire and Oklahoma.

Lastly and also from Reuters, the Russian government is accepting applications from companies who want to sell credits, for a profit, to Western countries. Previously, legal doubts had stalled the Russian market.

As promised last week in our post announcing Verdant’s auction with World Energy, we wanted to share with you some industry commentary, as it was the first auction of its kind in North America. Some articles posted that discussed the Alberta regulations and trading market, and the actual auction:

Point Carbon (registration needed, free trial available) looks at Alberta’s regulations and how the Verdant auction was facilitated under that legislation. Hal Hamilton, founder of Verdant Energy had been previously “underwhelmed” with the price of carbon credits – most were under C$10 per tonne, well under the C$15 per tonne option emitters have to pay directly into the government. Utilizing World Energy, Verdant was able to receive prices between the C$10 – 15 range.

Air Daily (registration needed, free trial available) discusses the Alberta trading scheme and the success of the auction, by looking at the price range of the credits. With companies still trying to understand Alberta’s new GHG trading program and prices in the bilateral market running fairly low, the auction exceeded Verdant’s expectations.

Restructuring Today (registration needed, free trial available) looks at the auction, focusing on how the auction worked within this immature market. They also describe how Verdant gained the credits by burning biomass at one of the company’s Alberta plants.

We’d love to hear your comments on the articles as well as where you think the Alberta market, and other trading schemes, are headed.

The Wall Street Journal looks at the rise in activity in the carbon market – with 2.7 billion metric tons traded last year, equaling $69.1 billion. With this increase in trading, most major investment banks have created carbon desks. Kind of a carbon market 101 as it doesn’t delve too deeply into either the US or foreign market.

This article is from Reuters and announced that 58 companies, cities and orgs have volunteered to begin reporting emissions to the Climate Registry in June - including Shell, Xcel Energy, Alcoa, Duke Energy, PG&E and the USPS.

Two additional blog posts to consider, both from RenewableEnergyAccess.com. First the story of former NH Governor pleading with the US to devote money to renewable and second a housing project featuring shared renewable energy.