Carbon Credits

1
Carbon Credits
2
Who Is C-Green Aggregators Inc.

• C-Green Aggregators is a Regina based company
  founded in 2006
• C-Green is the largest agricultural aggregator on
  the Chicago Climate Exchange and North America
• C-Green contracts acres of prairie farm land that
  are actively engaged in the practices of no and
  minimum till farming and sells the credits on the
  CCX
• We are a privately held company
• We have very good knowledge about trading on
  exchanges
• We have contracted with 2200 producers initially
  and recently have contracted an additional 1000
  producers
• C-Green is a funding member of IPOG tillage
  working group

3
Who is C-Green?

• We have all of our financial records and
  transactions independently audited
• We have an extensive background in agriculture
• We farm over 7000 acres of cropland in
  Saskatchewan
• We are founding shareholders in North Americas
  Largest wheat based ethanol plant Terra Grain
  Fuels producing annually 160mm Litres of Ethanol
• We are the first company to successfully
  aggregate and sell Canadian agricultural carbon
  credits in a live market
• We have sold over 26,000,000 of carbon credits
• We have developed a good working relationship
  with SCIC and appreciate their efforts and
  contributions
• We have provided work for SCIC employees on there
  downtime
• We are one of the oldest offset aggregators on
  CCX

4
Project Successes to date

• C-Green has had huge success in this marketplace
• We have a common sense approach that makes sense
  from both buyer and seller
• We have contracted over 7.4 million acres to date
• We deal with approximately 3000 clients
• Our feedback has been very positive
• We have a set standard of rules and adhere to
  them faithfully

5
What is the CCX

• Chicago Climate Exchange (CCX) is the worlds
  first and North Americas only legally binding
  rules-based greenhouse gas emissions allowance
  trading system, as well as the worlds only
  global system for emissions trading based on all
  six greenhouse gases. 
• CCX members are leaders in greenhouse gas
  management and represent all sectors of the
  global economy, as well as public sector
  innovators. Reductions achieved through CCX are
  the only reductions in North America being
  achieved through a legally binding compliance
  regime, providing independent third party
  verification provided by FINRA and price
  transparency.  The founder, Chairman and CEO of
  CCX is economist and financial innovator Dr.
  Richard L. Sandor, who was named a Hero of the
  Planet by Time magazine for his founding of CCX.
• CCX emitting Members make a voluntary but legally
  binding commitment to meet annual greenhouse gas
  (GHG) emission reduction targets. Those who
  reduce below the targets have surplus allowances
  to sell or bank those who emit above the targets
  comply by purchasing CCX Carbon Financial
  Instrument (CFI) contracts

6
What is the CCX

• CCX is a global market place with exchanges in
  London, Tianjin China, Montreal and Chicago
• CCX was founded by funding from the Joyce
  foundation to prove the concept
• President Elect Barack Obama was on the board of
  the Joyce foundation and he approved the funding
• Has the ear of the US government and President to
  shape new climate change legislation
• Is a publicly traded company owned by Climate
  Change Plc in London traded on the London Stock
  Exchange on the AIM division with a market cap of
  around 1bln
• Largest Carbon Market in North America with an
  emissions baseline of 600mm tonnes (albertas
  market has a baseline of 100mm tonnes)
• Has just shy of 500 members
• 17 of the Dow jones industrials are members
• 20 of US Electrical Utilities are members
• Recently Established the California Climate
  Exchange to trade in California
• Set up an exchange in partnership with the TMX
  group and now has a futures contract on the
  montreal bourse

7
What is the CCX

• CCX has now positioned itself as the primary
  bourse for emissions trading
• Owns 100 of the European Climate Exchange which
  trades over 97 of all exchange cers daily 90
  of all exchange based credits
• Has a market share of about 97 of all RGGI
  futures on the CCFE
• MCeX is the premier trading market in Canada with
  transparent pricing mechanisms
• MCeX is the only futures exchange that is
  actively trading a futures contract

8
What are CCX Reductions
                                                  
              

• In Phase I, Members committed to reduce emissions
  a minimum of 1 per year, for a total reduction
  of 4 below Baseline.  In Phase II, CCX Members
  commit to a reduction schedule that requires year
  2010 emission reductions of 6 below Baseline at
  minimum.
•  Year  Members of Phase I and Phase II  Members
  of Phase II Only
•  2003   1 below Baseline  --
•  2004   2 below Baseline  -- 
•  2005  3 below Baseline  --
•  2006  4 below Baseline  --
•  2007  4.25 below Baseline 1.5 below Baseline
   
•  2008  4.5 below Baseline  3 below Baseline
•  2009  5 below Baseline  4.5 below Baseline
•  2010  6 below Baseline  6 below Baseline

9
CCX Offsets Allowed

• Ag Tillage
• Ag Methane
• Landfill Methane
• Rangeland soil carbon
• Coal Mine Methane
• Ozone Depleting Substance destruction
• Energy Efficiency and Fuel Switching
• Forestry
• Renewable Energy

10
CCX CFI Contract Specs

• Product Type
• Cash Product Contract Size
• 100 metric tons Quotation
• US dollars Minimum Tick Increment
• .05 per ton 5.00 per contract Symbol
• CFI Trading Hours
• 830 a.m. 200p.m. Central Time Products
  Offered
• Vintages for 2003 - 2010 Product Availability
• All vintages offered are eligible for trading.
  Transaction Methods 
• Transaction participation eligibility is limited
  to CCX members who qualify as eligible commercial
  entities. 1. CCX offers an internet-based,
  electronic trading system for submission of bids
  and offers for anonymous, cleared agreements
  executed on price and time priority.2.
  Electronic bilateral agreements between
  members3. Pre-negotiated block trades and cash
  transactions may be negotiated at any time, but
  must be reported to CCX in accordance with its
  rules. Deliverable Instrument
• CCX Carbon Financial Instrument Delivery Process
• All transactions are delivered through the CCX
  Clearing System and are held by the CCX Registry
  on the trade day. Earlier dated vintages may be
  delivered against later vintage trades. Clearing
  and Settlement Process
• Transactions (with exception of bilateral
  agreements) are cleared on trade day. Full
  contract value settlement occurs on the next
  business day. CCX substitutes as a counter party
  to all transactions and guarantees performance
  until settlement is completed. Bilateral
  agreement financial arrangements are settled by
  the participating parties.
• Closing Price 
• For each Vintage, the closing price will be based
  on the following criteria The last transaction
  executed on the Trading Platform during a trading
  session.
• If at the close the best bid is above the last
  trade price or the best offer is below the last
  trade price, then the closing price will be the
  best bid / best offer price.
• If no trades occur in the trading session, the
  closing price is the previous days closing price
  unless the best bid is above the previous days
  closing price or the best offer is below the
  previous days closing price, then the closing
  price will be the best bid / best offer price.
• The Exchange reserves the right to take into
  account other factors in determining closing
  prices.
• A block trade price will not serve as a closing
  price.

11
Benefits of Transactions through an Exchange

• -Easy transactions
• -Every credit traded has been third party
  verified and is legally binding
• -There is liquidity in an exchange which is very
  important
• -Emitters and sellers know the value of what
  there getting
• -An exchange provides registry services as well
  as it is a more transparent way of doing business
• -All the companies that deal with exchanges are
  credible
• Traded electronically on the ICE Trading Platform
• Benefits of networking through the membership

12
Membership on the CCX

• Aerospace EquipmentRolls-RoyceAutomotiveFord
  Motor CompanyBeverage ManufacturingNew
  Belgium Brewing CompanyChemicalsDow
  CorningDuPontRhodia Energy Brasil Ltda

• Electric Power GenerationAmerican Electric
  PowerAssociated Electric   Cooperative,
  Inc.Central Vermont Public ServiceDuquesne
  Light CompanyGreen Mountain PowerManitoba Hydro
  (Founding Member)NRG Power Marketing Inc.Puget
  Sound Energy, Inc.TECO Energy, Inc.
• Offset Aggregators
• 3 Phases Energy Services LLCAg Business
  Solutions LLCBlack River Commodity Energy  Fund
  LLCCarbon Farmers LLCCarbon Green LLCCarbon
  Market Solutions Ltd.Carbon Resource Management
    Ltd.Carbon-TF B.V.Cargill, IncC-Green
  Aggregator Ltd.

13
What Is Minimum and No Till Farming

• This type of farming is a practice that has been
  slowly gaining adoption in Canada and the U.S.
• This practice consists of direct seeding into
  standing stubble with absolutely no cultivation
  or tillage of any kind
• Discretionary tillage of up to 2
• The use of narrow openers is required for farmers
  to be eligible
• No more than 33 disturbance of the soil is
  allowed

14
What Is No and Minimum Till Farming

• Plants sequester CO2 out of the air and then it
  is put into the soil
• With the elimination of tillage and the use of
  narrow openers the CO2 is then stored in the
  ground and not released into the atmosphere
• The science used is from 25 years of data from
  the Swift Current Research Station by Dr. Brian
  McConkey Ag Canada
• Plants are great natural carbon scrubbers

15
Equipment used in the projects
16
Soil Zones and Credit Rates

• Black and Grey Wooded Soils 0.4 tonnes per acre
• Brown and Dark Brown Soils 0.2 tonnes per acre
• Alberta government rates 0.16 tonnes per acre in
  parkland soil
• 0.084 tonnes per acre in brown soils
• 1 tonne per acre for grassland
• 21 x credit rate for ag methane

17
Differences in the two ag markets

• CCX soil disturbance 33
• Alberta max soil disturbance 46
• CCX max allowable discretionary tillage is 2
• Alberta max allowable discretionary tillage is
  10
• This lowers the credit rate
• CCX makes a producer commit to a 5 year contract
• Alberta does not make you commit to any year
  contract uses an assurance factor
• CCX credit rates were developed by Ag canada soil
  scientist
• Verification is done by a professional accountant
  or professional engineer in Alberta
• CCX uses Crop Insurance field agents and records

18
How is this helping the environment

• Through these types of farming practices there is
  no debate that this does in fact put CO2 into the
  ground and store it
• Less passes over the ground means less fuel burnt
  which equals less NOX emissions this is a
  permanent reduction
• Smaller opener size requires less power which
  equals less fuel burnt
• Providing a financial incentive to those that do
  not farm in an environmentally friendly to change
  there practices to ways that are environmentally
  friendly
• We cant punish the people who have done the
  right thing early one it puts out the wrong
  message we need to keep the financial incentive
  there to keep them engaged in these practices
• The Albedo effect becomes more prevalent adding
  to permanent cooling of the earths atmosphere

19
Documentation and Commitments

• C-Green does 4 and 5 year commitments on the
  contracts
• We set up a 20 reserve pool to make sure that we
  deliver what we sell
• We dont use farmer supplied documentation
• The records must be credible third party records
  such as records from crop insurance not private
  consultants

20
Importance of third party Verification

• C-Green uses the crop insurance agencies of the
  provinces that it deals with
• People dont want to insure land they dont own
  so the acreage is very accurate
• Crop insurance has access to satellite imagery
  that is very accurate
• Crop insurance has an audit division already
  set-up
• These agencies have the best background for this
  type of work

21
Proof of Concept

• This drill was bought by money from Carbon
  credits through C-Green and traded on the Chicago
  Climate Exchange
• This drill is owned by Les McGrath of McGrath
  Farms of Leroy Sask
• This drill uses less power to pull than other
  drills because the openers are smaller which
  results in less CO2 released in the air as well
  as less NOx emissions because of less fuel burn
  per acre seeded

22
Compliance Based Markets in the works

• Alberta has set up a market
• This market place will allow the idea of
  reduced tillage with no environmental benefit
• This is geared for the Alberta marketplace where
  there is still substantial tillage happening
• It is in essence a carbon tax of 15per tonne
  they have also legislated out investment funds
• Based on the idea of giving credits to everyone
• This was designed to protect the oil and gas
  companies and not the environment
• Hedge funds that we have talked to have written
  this market off
• Montreal Exchange has criticized the Harper plan
  as weak and designed not to protect the
  environment
• RGGI Regional Greenhouse Gas Initiative
• WCI Western Climate Initiative ag will have a
  part still very early
• US federal market drafts of legislation will be
  out soon Ag will have a big part
• Canadian federal intensity market

23
People Enrolled