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CCX ® MARKET REPORT VOLUME 5, NUMBER 2 February 2008 CCX Carbon Market Data February

CCX ® MARKET REPORT

CCX ® MARKET REPORT VOLUME 5, NUMBER 2 February 2008

VOLUME 5, NUMBER 2 February 2008

CCX Carbon Market Data

February 2008 Trading Summary

CCX ® Sets New Record for Trading Day Volume

Chicago Climate Exchange, Inc. (CCX®) announced that it achieved a new record for trading day volume with 24,390 Carbon Financial Instrument® (CFI™) contracts transacted or 2.44 million metric tons CO 2 , making February 11, 2008 the busiest trading day in the history of CCX. Trading occurred in all vintages from 2003 through 2010.

CFI ® Prices and Volumes Soar in February

During February CCX saw record volumes combined with a signifi- cant increase in CFI contract prices. Trading volume for the month surpassed 10 million metric tons of CO 2 , shattering the previous monthly volume record set in February 2007 which saw 3.7 million metric tons CO 2 traded. CCX year-to-date volume is over 11.34 million metric tons compared to 22.9 million tons for the entire year 2007. February’s record volumes translate into a 651% increase in volume from the previous month. February also set the top five days with highest daily trading volume in CCX history.

Along with increased volumes, CCX CFI contract prices also in- creased significantly during February. CFI prices rose from $2.45 per metric ton at the end of January to $4.50 per metric ton on February 29, 2008. February prices averaged $4.14 per metric ton with a range of $2.60 to $4.60.

CCX Trading Activity

February 2008

 

Table 1

 

VOLUME

CLOSING PRICES ($ per metric ton)

(metric tons)

CFI Contract

Feb. ‘08

Program to

Jan. 31 ‘08

Feb. 29 ‘08

Date

2003

Vintage

926,800

5,088,500

$2.45

$4.50

2004

Vintage

1,054,100

6,051,000

$2.45

$4.45

2005

Vintage

1,169,300

7,334,700

$2.45

$4.45

2006

Vintage

1,920,500

9,074,000

$2.45

$4.45

2007

Vintage

1,618,000

7,951,200

$2.45

$4.50

2008

Vintage

754,100

3,767,700

$2.45

$4.50

2009

Vintage

978,000

4,105,500

$2.45

$4.50

2010

Vintage

1,628,800

4,955,100

$2.45

$4.50

Total

10,049,600

48,327,700

   

The figures above represent all trades posted to the CCX trading platform.

In This Edition:

Abbott Laboratories Joins CCX

CCX Member Companies Named Top Corporate Citizens by CRO

Michigan State and University of Iowa Partner to Transact Carbon Credits

US Carbon Market Predicted to Exceed $1 Trillion by 2020 CCFE Launches CFI Options Contracts ECX to launch CER trading on March 14 th

Most EU Countries Miss CO 2 Allowance Issuance Deadline

EU-27 emissions fall 0.7% in 2005

February 2008 CCX CFI Price and Volume

(2003 & 2008 vintages) Price (US$/metric ton), Volume (metric tons) Figure 1 $4.75 2,400,000 $4.50
(2003 & 2008 vintages)
Price (US$/metric ton), Volume (metric tons)
Figure 1
$4.75
2,400,000
$4.50
2,200,000
2,000,000
$4.25
1,800,000
$4.00
1,600,000
$3.75
1,400,000
1,200,000
$3.50
1,000,000
$3.25
800,000
600,000
$3.00
400,000
$2.75
200,000
$2.50
0
2/1 2/5 2/7 2/11 2/13 2/15 2/19 2/21 2/25 2/27 2/29
0 2/1 2/5 2/7 2/11 2/13 2/15 2/19 2/21 2/25 2/27 2/29 Total Volume 2008 Vintage

Total Volume

2008 Vintage

2003 Vintage

CCX market data and news: www.chicagoclimateexchange.com

February 2008 Carbon News

U.S. News

February 2008 Carbon News U.S. News Abbott Laboratories Joins CCX Abbott Laboratories, a

Abbott Laboratories Joins CCX Abbott Laboratories, a leading healthcare company, joined CCX and committed to the CCX GHG reduction and trading program. In 2007, Abbott became the first FORTUNE 500 Company to commit to going carbon neutral for its U.S. fleet of vehicles. Abbott has also installed a 500 kilowatt solar panel in its facility in South California capable of powering more than 100 homes for a year. Abbott employs 65,000 people and mar- kets its products to more than 130 countries.

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190 SOUTH LASALLE STREET, SUITE 1100 | CHICAGO, IL 60603 |

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CCX ® MARKET REPORT VOLUME 5, NUMBER 2 February 2008 February 2008 Carbon News US

CCX ® MARKET REPORT

CCX ® MARKET REPORT VOLUME 5, NUMBER 2 February 2008

VOLUME 5, NUMBER 2 February 2008

February 2008 Carbon News

US News cont’d

2 February 2008 February 2008 Carbon News US News cont’d CCX Member Companies Named Top Corporate

CCX Member Companies Named Top Corporate Citizens by CRO

Thirteen CCX Members, including American Electric Power, Alle- gheny Energy, Bank of America, Baxter, Ford, IBM, Intel, MeadWest- vaco, Motorola, Reliant Energy, Safeway, Temple-Inland and Waste Management, were named among the 100 Best Corporate Citizens for 2008 by Corporate Responsibility Officer Magazine. Motorola topped the category under climate change. IBM and Motorola fea- tured among 21 corporations that were named in top 100 list for 2007 as well.

Michigan State and University of Iowa Partner to Transact Carbon Credits Michigan State University and University of Iowa have agreed to a transaction of 5,000 CO 2 metric tons through the CCX program. The purchase of credits will allow MSU to meet its CO 2 reduction obligation under the CCX program and marks an innovative partner- ship between two public universities.

US Carbon Market Predicted to Exceed $1 Trillion by 2020 Analysts at New Carbon Finance expect that the US carbon market could grow to a value of $1 trillion based on expectations that a man- datory cap-and-trade scheme will be developed by the US govern- ment within a five year time frame.

CCFE Launches CFI Options Contracts Chicago Climate Futures Exchange launched CFI Options Contracts on February 29, providing market participants a full suite of risk hedg- ing tools in the CCX GHG emissions market. As of March 5 implied volatility for a call is 60% while implied volatility for a put is 43%.

Global Carbon Market News

ECX to Launch CER trading on March 14 th

The European Climate Exchange ® (ECX) will launch futures trading for UN-regulated Certified Emission Reductions (CERs) futures on March 14 th . The Euro-denominated contracts representing 1,000 CER credits will be physically deliverable in the UK registry. The first trad- able contract will be for December 2008 delivery, followed by quar- terly delivery dates – March, June, September and December.

delivery dates – March, June, September and December. Most EU Countries Miss CO 2 Allowance Issuance

Most EU Countries Miss CO 2 Allowance Issuance Deadline

Austria and Denmark were the only two EU countries to issue CO 2 allowances to regulated companies in time to meet the annual Feb 28 deadline. Austria issued approximately 29 million allowances while Denmark issued 24 million allowances. The largely missed deadline resulted in few allowances being available for spot trading in the EU ETS.

Energy & Emissions Market News

Natural gas spot prices increased in the final week of the month as space-heating demand remained strong across large population cen- ters in the Midwest and Northeast. Continued cold temperatures and increased crude oil prices, which rose to more than $100 per barrel on February 20 contributed to increases in natural gas prices. On February 20 spot prices at the Henry Hub increased by $0.73 per mmbtu to $9.08. This is the highest spot price at the Henry Hub in over a year (since February 5, 2007, when the price reached $9.10 per mmbtu) and 72% higher than its recent low of $5.29 on Septem- ber 4, 2007.

According to the EIA, U.S. coal production is estimated to have fallen by 1.3% in 2007. Projected weak demand for coal in 2008 will result in an additional 0.1% decline in coal production followed by a further 0.8% decline in 2009. In the Western region, coal production is ex- pected to increase by 0.4% in 2008, but decrease by 1.4% in 2009. Total coal stocks are estimated to have grown by 4.8% in 2007 to 196 million short tons. Total coal stocks are expected to fall by 0.6% in 2008.

WTI crude oil prices, which averaged $72.32 per barrel in 2007, are projected by the EIA to average $86.46 and $81.67 per barrel in 2008 and 2009 respectively. Regular grade gasoline prices, which averaged $2.81 per gallon in 2007, are projected to average $3.07 and $2.97 per gallon, respectively, in 2008 and 2009.

According to recent estimates by the EIA,, the number of cooling degree days in summer 2008 is projected to be about 10 percent lower than they were last year. Lower power demand is therefore projected, lowering growth in residential electricity sales this summer. Total electricity consumption is expected to grow by only 0.4 percent in 2008 however returning to growth rates of 1.6 percent in 2009.

Energy Prices

Table 2

NATURAL GAS

       

& OIL

JAN ’08

FEB ’08

AVG. %

FEB 29 ’08

FRONT MONTH

AVG. CLOSE

AVG. CLOSE

CHANGE

CLOSE

CONTRACT

Henry Hub Nat Gas

$7.99

$8.64

+8.1%

$9.37

WTI Light Sweet Crude

$92.93

$95.35

+2.6%

$101.84

Source: WTRG Economics

EU-27 Emissions Fall 0.7% in 2005 Greenhouse gas emissions in the EU 27 (excluding land use and land use change) totaled 5.18 billion metric tons CO 2 in 2005, down 0.7% from the previous year, according to EU data. Of the total, 4.19 bil- lion metric tons were emitted by the EU-15.

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CCX ® MARKET REPORT VOLUME 5, NUMBER 2 February 2008 CCFE ™ February 2008 Market

CCX ® MARKET REPORT

CCX ® MARKET REPORT VOLUME 5, NUMBER 2 February 2008

VOLUME 5, NUMBER 2 February 2008

CCFE February 2008 Market Data

During the month of February, 28,373 Sulfur Financial Instrument ® (SFI™) futures contracts traded on Chicago Climate Futures Exchange ® , making it the second-highest month on record after January 2008. A total of 58,068 CCFE SFI futures contracts, repre- senting 1.5 million tons of sulfur dioxide, have traded on CCFE thus far in 2008. This represents a year-over-year increase of 200% from 2007 and 37,606% from 2006. 11,530 SFI options contracts also traded during February.

Carbon Financial Instrument ® (CFI ® ) Futures on CCX carbon and Nitrogen Financial Instrument™ (NFI™) experienced record months in trading volume during February. 1,391 CFI Futures contracts traded during February (representing 1.4 million metric tons of CO 2 equivalent). Records for daily traded volume in the CFI futures contract were set on February 14 with 231contracts traded, and 221 contracts traded on February 6. In addition, 400 Nitrogen Financial Instruments™ (Annual) traded in February, representing more volume than total prior trading volume since the contract launched. See Table 3.

CCFE launched options on CCFE CFI futures on February 29. This is the third options contract on CCFE and will provide market participants with increased flexibility to hedge against price risks for CFI’s. 550 CFI options contracts traded on February 29. See Table 4.

CCFE Futures™

Table 3

 

MONTHLY VOLUMES

YEAR-TO-DATE VOLUMES

MONTH END OPEN INTEREST

Contract

Feb-08

Jan-08

%

Jan-Feb 2008

Jan–Feb 2007

%

Feb-08

 

Jan-08

 

%

CER

1

22

-95%

23

Not listed

Not listed

108

 

108

 

0%

CFI®

1,391

798

74%

2,189

Not listed

Not listed

2,187

 

2,039

 

7%

ECFI™

29

5

480%

34

Not listed

Not listed

39

 

40

 

-3%

ECO-Index

95

618

-85%

713

Not listed

Not listed

73

 

34

 

115%

IFEX™

200

1,510

-87%

1,710

Not listed

Not listed

3,014

 

2,914

 

3%

NFI™-OS

10

2

400%

12

52

-77%

12

 

12

 

0%

NFI™-A

400

0

NA

400

Not listed

Not listed

505

 

105

 

381%

SFI™

28,373

29,695

-4%

58,068

19,348

200%

22,011

 

16,217

 

67%

Futures Totals

30,499

32,650

-7%

63,149

19,400

226%

27,949

 

18,469

 

51%

CCFE™ Options

Table 4

 

MONTHLY VOLUMES

YEAR-TO-DATE VOLUMES

MONTH END OPEN INTEREST

Contract

Feb-08

Jan-08

%

Jan-Feb 2008

Jan –Feb2007

%

Feb-08

Jan-08

%

CER

1

0

0%

2

Not listed

Not listed

1

1

0%

SFI™

11,530

22,700

-49%

34,230

Not listed

Not listed

37,440

31,300

17%

CFI

550

Not listed

Not listed

550

Not listed

Not listed

0

Not listed

-

Totals

12,081

22701

-47%

34,782

Not listed

Not listed

36,641

31301

17%

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190 SOUTH LASALLE STREET, SUITE 1100 | CHICAGO, IL 60603 |

PHONE: 312.554.3350 | WWW.THECCX.COM

CCX ® MARKET REPORT VOLUME 5, NUMBER 2 February 2008 European Climate Exchange ® February

CCX ® MARKET REPORT

CCX ® MARKET REPORT VOLUME 5, NUMBER 2 February 2008

VOLUME 5, NUMBER 2 February 2008

European Climate Exchange ® February 2008 Market Data

February 2008 marked the second highest volume month on record for the European Climate Exchange (ECX ® ). Nearly 140 mil- lion metric tons CO 2 traded on ECX, representing an increase of 122% over February 2007 volume. Futures represented 84% and options represented16% of all transactions on ECX. Average daily futures and options volume equaled 6 million metric tons CO 2 . Futures open interest at the close of the month was 148 million metric tons CO 2 , options open interest at 60 million metric tons CO 2 (40 million metric tons CO 2 for calls and 20 million metric tons CO 2 for puts).

Two new emissions members joined ECX this month: Klima Invest A/S and Susquehanna International Group (SIG).

ECX will launch trading of UN-regulated Certified Emissions Reduction (CER) futures on March 14 th . ECX will launch a total of 17 CER contracts including futures and multiple options expiration dates. The Euro-denominated contracts representing 1,000 CER credits will be physically deliverable in the UK registry. The launch comes after ECX and LCH.Clearnet, its clearing house, came to an agreement regarding the launch of UN carbon credits on its electronic exchange. ECX Chief Executive Patrick Birley said: “We are delighted that all outstanding issues have been resolved and we look forward to the imminent launch of ECX CERs. We have seen strong demand from the market for products based on CERs, which will trade alongside our successful ECX EUAs futures and options, and we believe that liquidity will develop rapidly.”

More information on ECX CER futures can be found at: http://www.europeanclimateexchange.com

ECX ® CFI Futures and Options

   

Monthly

Monthly

       

Total Volume

 

Contract

Month

Traded High

(€)

Traded Low

(€)

Month End

Settlement (€)

%

%

Avg Implied

Volatility (%)

(Lots) 2

Open Interest

(Lots)

Mar-08

Futures

0.01

0.01

0.01

-0.01

-50%

 

156

205

 

Options

         

0.05%

-

-

Dec-08

Futures

22.10

18.95

21.31

+2.21

+11.6%

 

97,426

75,361

 

Options

         

49.52%

17,930

50,005

Dec-09

Futures

22.50

19.32

21.83

+2.26

+11.5%

 

9,494

31,570

 

Options

         

49.39%

3,950

9,415

Dec-10

Futures

23.00

19.82

22.51

+2.41

+12.0%

 

5,452

15,024

 

Options

         

48.72%

500

565

Dec-11

Futures

23.60

21.00

23.21

+2.46

+11.9%

 

3030

9,052

 

Options

         

48.26%

-

65

Dec-12

Futures

24.59

21.42

24.15

+2.49

+11.5%

 

1,935

16,910

 

Options

         

47.83%

-

65

Totals

Futures

           

117,493

148,122

 

Options

           

22,380

60,115

ADV 3

Futures

           

5,595

 
 

Options

           

1,066

 

2 Once ECX lot/contract = 1000 EU Allowances

3 ADV = Average Daily Volume

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PHONE: 312.554.3350 | WWW.THECCX.COM