1. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Marktrealität und Ausblick Croatian-German workshop on business cooperation Zagreb, 12–13 December 2002 Christiaan Vrolijk Strategic Services Unit Natsource Tullett Europe Ltd

2. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Natsource Info Führender Broker-Dealer – New York, Toronto, Calgary, London, Oslo, Sydney, Tokyo Environmental Products – Strom, Gas, Kohle – GHG, Erneuerbare Energie, SO2, NOx, Wetter Finanzielle Produkte – Projektfinanzierungs-Beratung – Value- & Asset Management Strategische Beratung – multinationale Unternehmen, CAN, NL, EU, UK, PCF etc.

3. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Inhalt 1. Einführung 2. GHG Markt bisher – Preisszenarien und Marktausblick 3. Natsource Rolle im Markt

4. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Einführung 1. Einführung

5. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Entwicklung Erste Transaktionen seit 1997 ERsEmission Reductions VERsVerified Emission Reductions Seit Marrakesch (2001) zunehmend CERsCertified Emission Reductions ERUsEmission Reduction Units AAUsAssigned Amount Units UK, DK and EU Allowances

6. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Environmental markets Erneuerbare Energie – Netherlands – UK – Sweden – Italy – Belgium – Austria – RECS – EU Directive Greenhouse gases – Denmark – UK – (C)ERUPT – Other governments – PCF – VERs – EU allowances – Kyoto mechanisms

7. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Warum jetzt handeln Käufers Hedge Risiko Handeln Grünes Image Policy Entwicklung Diversifiziertes Portfolio Verkäufer Asset liquidieren Finanzierung der projekte & technology Brand Recognition Policy Entwicklung Capture revenue in case of Kyoto failure Emission reductions = Risiko & opportunity

8. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Der heutige Markt 2. Der heutige Markt

9. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Käufer World Bank Prototype Carbon Fund Private funds Niederlandische Regierung: Erupt & Cerupt Andere Regierung: – Austria, Sweden, Finland, Denmark, etc. Private Firmen

10. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia UK Marktteilnehmer – 34 Direkt, 5.000 CCL und non-naturals > 200 trades bisher; Markt: ~£4.00 @ £5.00

11. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Globaler GHG Markt Vorrangig VERs Forwards & Call Optionen Letzten 12 Monate sehr aktiv World Bank Schätzung: ~160MtCO2e UK und DK Allowances seit Oktober 2001 Seit den Marrakesch Akkords sind Verkäufer in der Lage CERs, ERUs, AAUs und evtl. EU Allowances anzubieten

12. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Preise VERs JI-VERs CDM-VERs NL-Erupt AAUs CERs ERUs EU Dk UK $0.60 – 1.50 $1.65 – 3 $ 1.15 – 4.83 5 – 9 7 $2 – 6 4 – 5 4 – 6 Dkr 3 – 36 £4 – 5

13. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Preis vs. Risiko Angebot garantierter Kyoto Compliance Tools – Verkäufer Risiko: Projektrisiko, Volumen, Kyoto eligibility, Kreditwürdigkeit & Preis – Käufer Risiko: Kredit & Preis – Käufer zahlt Risikoprämie & Zeit – Verkäufer muss notfalls Ersatzlieferung vom Markt kaufen

14. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Natsources Rolle im Markt 3. Natsources Rolle im Markt

15. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Natsources Rolle im Markt Alle transactional services erforderlich Regelmäßiger Kontakt mit Markt Teilnehmer – Käufer und Verkäufer (buy/sell) – Up to date Markt Informationen – Beste Preise Umfangreiche Erfahrung im Handel – Auch in diesem Markt Optionele / Transaktionsstruktur (Risiko, Cash Flow etc.)

16. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Trading tools Immediate settlement / spot market – Deliver now, pay now Forwards – Deliver later, pay now or later – Can be stream of vintages (e.g. 2002–2006) – Price reflects costs, interest, risk Options – Put, call, collar, straddle – Limit price risk on buy and sell side – Limited risk of failure of delivery

17. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Natsource market platform

18. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Contact / information Transactional services: Harvey Abrahams, Tim Atkinson, Martin Collins, Nina Marenzi, Albrecht von Ruffer, Fiona Santokie Tel: +44 –20–7827–2942 Advisory services: Dirk Forrister, Frank Joshua, Christiaan Vrolijk Tel: +44 –20–7827–2410 cvrolijk@natsource.com www.natsource.com Calgary – Houston – London – New York – Oslo Ottawa – Sydney – Tokyo – Toronto – Washington DC

19. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Market reality and prospects Croatian-German workshop on business cooperation Zagreb, 12–13 December 2002 Christiaan Vrolijk Strategic Services Unit Natsource Tullett Europe Ltd

20. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia About Natsource Trading floors globally – New York, London, Tokyo, Toronto, Oslo, Sydney Transactional services – Electricity, natural gas, coal – Greenhouse gases, renewables, SO 2, No x, weather Financial services – Project financing consulting – Value & asset management Strategic consulting – Multinationals, EC, NL, UK, World Bank, etc.

21. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia This presentation 1. Introduction 2. The markets today – Prices and market prospects 3. Natsource role

22. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Introduction 1. Introduction

23. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Market development First transactions in 1997 ERsEmission Reductions VERsVerified Emission Reductions Increasing since Marrakesch (2001) CERsCertified Emission Reductions ERUsEmission Reduction Units AAUsAssigned Amount Units UK, DK and EU Allowances

24. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Environmental markets Renewables – Netherlands – UK – Sweden – Italy – Belgium – Austria – RECS – EU Directive Greenhouse gases – Denmark – UK – (C)ERUPT – Other governments – PCF – VERs – EU allowances – Kyoto mechanisms

25. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Drivers for early trading Buyers Hedge risk Proprietary trading Green public image Policy development Diversify portfolio Green Power Sellers Monetise asset Finance projects & technology Brand Recognition Policy development Capture revenue in case of Kyoto failure Emission reductions = Risk & opportunity

26. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia The markets today 2. The markets today

27. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Buyers World Bank Prototype Carbon Fund Private funds Dutch government Erupt & Cerupt Other governments: – Austria, Sweden, Finland, etc. Private companies

28. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia UK Market participants – 34 direct, 5,000 CCA and traders Over 200 trades so far; market ~ £4.00 @ £5.00

29. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Global GHG market Large share of VER forwards & call options Greatly increased activity in the last year New World Bank estimate: ~160MtCO2e UK & DK Allowances since October 2001 Since Marrakesh, sellers are offering CERs, ERUs, AAUs and also EU allowances

30. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Prices VERs JI-VERs CDM-VERs NL-Erupt AAUs CERs ERUs EU Dk UK $0.60 – 1.50 $1.65 – 3 $ 1.15 – 4.83 5 – 9 7 $2 – 6 4 – 5 4 – 6 Dkr 3 – 36 £4 – 5

31. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Price v. risk Guaranteed Kyoto Compliance Tools – Sellers risk: project, volume and price risk, Kyoto eligibility and credit worthiness – Buyers risk: credit and price – Buyer will discount for risk & time – Seller might have to contract emergency replacement reductions on the market

32. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Natsources role in the market 3. Natsources role in the market

33. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Natsource role in the market All transactional services required Regular contact with market players – On both sides (buy/sell) – Up to date market information – Best price Extensive trading experience/knowledge – Also in these early markets! Best contract structure to suit your business

34. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Trading tools Immediate settlement / spot market – Deliver now, pay now Forwards – Deliver later, pay now or later – Can be stream of vintages (e.g. 2002–2006) – Price reflects costs, interest, risk Options – Put, call, collar, straddle – Limit price risk on buy and sell side – Limited risk of failure of delivery

35. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Natsource market platform

36. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Contact / information Transactional services: Harvey Abrahams, Tim Atkinson, Martin Collins, Nina Marenzi, Albrecht von Ruffer, Fiona Santokie Tel: +44 –20–7827–2942 Advisory services: Dirk Forrister, Frank Joshua, Christiaan Vrolijk Tel: +44 –20–7827–2410 cvrolijk@natsource.com www.natsource.com Calgary – Houston – London – New York – Oslo Ottawa – Sydney – Tokyo – Toronto – Washington DC

37. Greenhouse Gas STRATEGIC SERVICES Climate in Croatia Climate Change and Power Lead author: Christiaan Vrolijk Published by: RIIA/Earthscan Price: £19.95 paperback £50 hardback Order: www.riia.org sam.usiskin@riia.org