CLIMATE ACTION RESERVE PROJECT SHOWCASE Alligator River Avoided Conversion Project CAR – BAAQMD California Offsets Workshop Project Showcase August 8, 2011

CONFIDENTIAL - Subject to NDA 2 | Blue Source | A Leading Climate Change Portfolio About Blue Source Carbon Credit Portfolio  Leading domestic project development and marketing for over 10 years  M tonne portfolio (function of specs)  Have sold over 20M tonnes over the past 10 years  Projects sourced from 48 states and most provinces in Canada  Net-back structure aligns incentives between Blue Source and suppliers  Federal and state carbon advocacy leadership  Developed the first protocols in numerous carbon categories  More CAR listed forestry projects than any other developer Blue Source has built the largest portfolio of North American emission reduction credits and projects.

CONFIDENTIAL - Subject to NDA Forestry Project Commercialization  Methodology Development or Modification  Forest Carbon Inventory – Design and Implementation  Management Plan  Project Design Document (PDD) Development  Validation  Verification  Registration  Marketing 7 | Blue Source | A Leading Climate Change Portfolio Blue Source has extensive experience in creating and selling tonnes in the market. Speed, technical knowledge, premium pricing are central to the service offering

CONFIDENTIAL - Subject to NDA Working Woodlands: Changing Private Forest Outcomes... vs. Private Landowner Trends and Challenges Aging landowners with wave of intergenerational transfer Lack of forest and estate planning Disinterested heirs Ecological + amenity values over income, but… Harvest without plan or professional assistance Poor incentives to protect and manage forests sustainably = Forest parcelization and forest use/cover fragmentation + degraded private forest lands via poor management

CONFIDENTIAL - Subject to NDA No up-front, out-of-pocket costs Full forest + carbon inventory and assessment 10-year FSC management plan and certification 100% of FSC-certified wood product revenues 50%+ of forest carbon revenues – important new source of annual cash flow Inclusion in landscape-scale conservation project designed by TNC Landowner Benefits Focus and protect public/private investments Active and engaged landowners Repair degraded forests; maintain desired conditions Keep working landscapes working and in private ownership Public Benefits Blue Source – Nature Conservancy ‘Working Woodlands’ Program

CONFIDENTIAL - Subject to NDA Alligator River Avoided Conversion Project  Native forest stands consisting of mixed pine and bottomland hardwoods  Pre-sold tonnes to help achieve near term revenue to landowner 7 | Blue Source | A Leading Climate Change Portfolio  2,750 Acres in Hyde County, NC  Permit to convert to agriculture  Based on anticipated carbon revenue decided to protect forest via easement instead

CONFIDENTIAL - Subject to NDA Alligator River Avoided Conversion Project 7 | Blue Source | A Leading Climate Change Portfolio

CONFIDENTIAL - Subject to NDA Alligator River Avoided Conversion Project – Habitat Protection 7 | Blue Source | A Leading Climate Change Portfolio

CONFIDENTIAL - Subject to NDA Alligator River Avoided Conversion Project A lot of steps:  Designation of Authority Form  Project Submittal Form  Attestation of Title  Boundary Map  Signed Easement  Inventory  Growth Model  Monitoring Plan  Project Design Document  First Verification  Project Implementation Agreement  Initial Registration of Tonnes  Marketing of Project  Ongoing monitoring/verification (up to 200 years)  Transfer of Tonnes to Buyer 7 | Blue Source | A Leading Climate Change Portfolio Process to date:  Delays in getting definitive guidance related to soil carbon  First-of application of protocol – many delays but will be a model for others to follow

CONFIDENTIAL - Subject to NDA Forest Carbon Credit Development Observations 7 | Blue Source | A Leading Climate Change Portfolio  How much uptake on 200 year landowner commitment?  Do the rules keep changing?  Process from listing to registration too long  Mechanics of converting CRTs to ARB compliant offsets

CONFIDENTIAL - Subject to NDA Thank You! 7 | Blue Source | A Leading Climate Change Portfolio Roger Williams President Blue Source P: E: