Back to the Future:Back to the Future:State of the Voluntary Carbon Markets 2011State of the Voluntary Carbon Markets 2011

PREMIUM SPONSORPREMIUM SPONSOR SPONSORSSPONSORS

2

Simplified diagram of the paths voluntary carbon credits Simplified diagram of the paths voluntary carbon credits can take from reduction to final buyerscan take from reduction to final buyers

PROJECT DEVELOPERPROJECT DEVELOPER BROKERBROKER

RESELLERRESELLER

PRE-COMPLIANCEPRE-COMPLIANCE(surrender or trade)(surrender or trade)

PURELY VOLUNTARYPURELY VOLUNTARY(retirement)(retirement)

3

• Report informed by market-wide, comprehensive survey of the Over the Counter (OTC) voluntary carbon markets. “OTC” market is comprised of decentralized, B2B or bi-lateral trades not occurring on exchanges or through formal trading platforms or programs

• Database of 1,400 companies in marketplace. 284 responded, another 261 suppliers did not transact credits in 2010, were no longer selling voluntary carbon credits or were no longer in business

• Total % coverage: ~50% of companies, more than 50% of volume• Use transaction volume to weight response significance. We

consider a “transactions” to be the point at which you sign a contract – not when $ exchanged or credits delivered, which can happen in future. Means we also track forward sales and options. Best indicator of level of interest and investment in marketplace.

This year, a record 284 respondents from 38 countries This year, a record 284 respondents from 38 countries responded to our surveyresponded to our survey

4

# of suppliers from South doubled (2009: 29; 2010: 58). # of suppliers from South doubled (2009: 29; 2010: 58). Almost ½ from Latin America: 33, up from 13 in 2009Almost ½ from Latin America: 33, up from 13 in 2009

Survey Participant Location COUNTRY 2009 2010BRAZIL 5 10

MEXICO 2 7

GUATEMALA 3

CHILE 3

BOLIVIA 1 2

PANAMA 2

PERU 2 2

URUGUAY 1 2

ARGENTINA 1

COLOMBIA 1

COSTA RICA 0 1

5Source: “State of the Voluntary Carbon Markets 2011”, Ecosystem Marketplace and Bloomberg New Energy Finance

Historic Transacted and Retired VolumesMtCO2e

OTC market OTC market andand Latin America saw record transaction Latin America saw record transaction volumes, even excluding CCXvolumes, even excluding CCX

LATIN LATIN AMERICA AMERICA = 28%= 28%

$$

6Source: “State of the Voluntary Carbon Markets 2011”, Ecosystem Marketplace and Bloomberg New Energy Finance

Transaction Volume by Location and Project Type

Forest carbon changing the landscape for project location, Forest carbon changing the landscape for project location, once a toss up between US- and Asia-based projects once a toss up between US- and Asia-based projects

LA supplanted top LA supplanted top country locations:country locations:

US: 34%PERU: 17%PERU: 17%BRAZIL: 8%BRAZIL: 8%INDIA: 8%

TURKEY: 8%CHINA: 4%

2009: 16% or 7 MtCO2e

MtCO2e

7Source: “State of the Voluntary Carbon Markets 2011”, Ecosystem Marketplace and Bloomberg New Energy Finance

Land-based projects sequester 46% of all OTC credits; 90% in Land-based projects sequester 46% of all OTC credits; 90% in Latin America; Latin America; REDD stacked the odds in favor of VCSREDD stacked the odds in favor of VCS

Market Share by Project Type, Latin America OTC Market Share by Standard, Latin America OTC

8Source: “State of the Voluntary Carbon Markets 2011”, Ecosystem Marketplace and Bloomberg New Energy Finance

As seen in previous years in US and AU, Latin American As seen in previous years in US and AU, Latin American buyers in 2010 sought credits from their own backyardbuyers in 2010 sought credits from their own backyardLatin America Buyers Market Share (tracked 12 MtCO2e)

MOTIVATION (tracked 9 MtCO2e)

%

Business For-Profit: Purely Voluntary

50%

Business For-Profit: Pre-Compliance

31%

Unknown 5%

Business For-Profit: Resale to voluntary buyers

1%

9Source: “State of the Voluntary Carbon Markets 2011”, Ecosystem Marketplace and Bloomberg New Energy Finance

SECTOR VOLUNTARY PRE-COMPLIANCE TOTAL

FORESTRY 25.9 MtCO2e 15.4 MtCO2e 41.3 MtCO2e

RENEWABLES 4.6 0 4.6

METHANE 0.09 0 0.09

EFFICIENCY / FUEL SWITCH

6.7 0.4 7.1

INDUSTRIAL GAS 0.4 0 0.4

TOTAL THROUGH 2015TOTAL THROUGH 2015 53 MtCO2e

Trends in Supply for Latin American Offsets Through 2015

Where will future supply come from? Reported supply Where will future supply come from? Reported supply through 2015 equates to 13 through 2015 equates to 13 MtCO2eMtCO2e/year through 2015/year through 2015

INTERNATIONAL DOMESTIC

THE USUAL SUSPECTS:EU- and US-based companies absorbed ½ this

volume (~7 MtCO2e) in 2010

EXCHANGES:•Santiago•Colombia

•Caribbean Basin

CALIFORNIA:Up to 71 MtCO2e international REDD could

pass through that program through 2020, but no details yet

LARGE DOMESTIC FIRMS LOOKING @ FOOTPRINTS; SUPPLY CHAIN EXPORTERS

Vale Energy, Banco do Brasil, Pemex, Banco Bradesco, Isagen, Endessa

“OTHER” INTERNATIONAL PROJECT FINANCE:

Bilateral/multilateral, fund-based

POTENTIAL DOMESTIC MARKETS:WCI, Chile, Brazil (?) – some sub-national

movement

Trends in Demand for Latin American Offsets

Thanks to suppliers and sponsors! For more Information:Thanks to suppliers and sponsors! For more Information:

PREMIUM SPONSORPREMIUM SPONSOR SPONSORSSPONSORS

Molly Peters-Stanley, AssociateMolly Peters-Stanley, AssociateEcosystem MarketplaceEcosystem Marketplacempeters-stanley@ecosystemmarketplace.com(202) 298-3005