issue 14.0, New Values Newsletter

1. New Values news
New Values likes to involve you in its plans and ideas. We keep you constantly informed about what we’re doing and how we’re responding to the latest market developments.

2. Jos Cozijnsen’s column
He’s a familiar figure: Jos Cozijnsen, the man behind emissierechten.nl and guest speaker at various meetings on emissions trading. Every month he airs his opinion in his column.

3. Diary
It’s important to stay up to date in a market that is continually subject to change. New Values keeps you informed about interesting congresses and workshops in the Netherlands and abroad.

1. New Values news

Register now for the New Values Tradegrounds!

In February 2005 New Values is organizing the first Tradegrounds, an international CO2 emissions trading simulation and competition. The Tradegrounds present an outstanding opportunity to gain experience with European emissions trading.

The simulation game is open to all companies in the National Allocation Plans of Belgium, Germany, the Netherlands and the United Kingdom. Participation is free of charge.

This three-week competition simulates the period 2005-07 and is taking place on the fully operational Climex trading platform. All aspects of emission trading are dealt with:

• Authentic trading with Allocations of EUAs (European emission rights) on a real trading platform;
• Annual reports in which emissions must be covered by EUAs or CERs;
• Simulated CDM projects and technology projects to invest in;
• Simulated news which influences the market.

Moreover, the simulation involves a competitive element. The aim of the Tradegrounds is to achieve an optimal combination between environmentally friendly and commercially successful trading. And there are some nice prices for companies that perform well.

Don’t miss this chance, register now at www.newvaluestradegrounds.com. You’ll find more detailed information here, too.

Visit the New Values Masterclass

Trading in CO2 emission rights officially started on 1 January. New Values is ready for this market and facilitates international Spot and Forward trading on its Climex trading platform.

Climex provides:

• A user-friendly trading platform suitable for both major and small-scale emitters.
• Transaction completion without risk. Climex uses the clearing system of the Amsterdam Power Exchange (APX).
• Legal, financial and administrative settlement of transactions at low cost.

Climex is ready for the market. But are you? To help you answer this question and to let you find out more about the New Values and the latest market developments, we invite you to take part in:

The New Values Masterclass on Wednesday 19 January, 2005 from 10 am to 5 pm at Frankfurt Airport

The Masterclass is arranged exclusively for:

• Traders, lawyers and financial managers for the 50 biggest CO2 emitters and traders in Europe;
• Interested parties from governments, regulating authorities, registers and the press;

The following themes will be dealt with during the Masterclass:

• Getting the market running within the current allocation framework;
• Facilitating efficient transactions at low cost – what do you expect of New Values?
• How is the market for CO2 emission rights developing and what is New Values’ position within this market?
• How does the Climex online trading platform work? (negotiable products, functionalities, contracts, etc.)
• How does the interface with the registers work?

Participation in the Masterclass is free of charge.

Take a look at the Masterclass programme.(PDF, 570k)

You can register at www.newvalues.net

Evaluation of NEA Demonstration by New Values

The NEA Demonstration of last summer was an intensive and instructive preparation for emissions trading. New Values participated in this project as trading platform for spot market contracts. These are contracts that are concluded immediately after a transaction has taken place. Just like various other parties, we too have evaluated the demonstration period. So it’s time to present some results.

During the demonstration 51 CO2 transactions and 39 NOx transactions were conducted through New Values. A total of 26 traders registered and 23 different parties took part in trading. Of all NEA Demonstration participants, 80% traded via New Values. Moreover, 70% of all transactions were realized on our platform.

Towards the end of the demonstration period we carried out an evaluation with all our users. This revealed that all were highly satisfied with user friendliness. During the evaluation it became clear that many traders wished to be able to link smaller and larger transaction quantities together. We have now made a number of adjustments which makes it easier to carry out transactions between orders involving various quantities.

The evaluation has also prompted us to give extra attention to the registration procedure, provision of transparency and constant updating of transaction status to enable a quick response to any glitches.

Download the full evaluation report for a complete picture of New Values’ participation in the NEA Demonstration.

Electronic data exchange with registers

On 28 February 2005 New Values will be commencing international spot trading. By way of preparation, intensive consultation is now being conducted with the registers of the Netherlands, Germany, the United Kingdom and France. New Values intends that the data exchange between the trading platform and the registers should take place fully electronically. In order to realize this, agreements needs to be made with the registers on aspects such as:

• The authorization of traders;
• The transaction data to be exchanged;
• Data security;
• The electronic communication format.

As a means of structuring this consultation, New Values has itself clearly set out all the possible ways in which data exchange can be organized. The various registers have already begun consulting with a view to defining a single standard for the exchange of data with both trading platforms and individual companies. We roundly applaud this, of course, because it will not only simplify the development but also make it faster and cheaper.

2. Jos Cozijnsen’s column

A brief look at the European emissions market

So now it’s really happened. The emissions market in Europe is no longer a speculation market but a compliance market. And this means that by April 2006 the thousands of companies covered by the emissions trading system must have sufficient emission rights to cover their CO2 emissions for the preceding year. Will this work out OK? I think it will. In the EU 2.2 billion tons of emission rights are allocated pro year, for at the most 2 billion tons of emissions.

Will all sorts of things go wrong in the process? Here too, I’m sure they will. Companies will get tangled up in fiscal regulations, for instance, and lose their # € 100,000 emissions trading bonus to the tax authorities because the profit is taxed and inter-company trading has to be set off. And some companies will get tangled up in the monitoring regulations. But not the Dutch ones, because the protocols have already been soundly tested.

Legal actions on high energy prices can be expected, led by the aluminium industry which doesn’t even come under emissions trading. Their argument: the energy supplier had enough emissions leeway and the opportunity to deliver an equal amount of energy using less fossil sources – such as biomass auxiliary firing and captured methane – and thus at a lower energy price.

And what about the CDM market? This will continue to be led by governments and banks. Most of the EU Member States have a hole in their Allocation Plan, certainly for the period 2008-2012. And this gap will be filled by CDM credits from the developing countries. Companies will be very alert to this market because the CDM certificates will remain valid after 2008 as well, while in 2008 the EU emission rights will make way for new ones. This is definitely interesting, because the following trading period will be less generous in its allocations: fewer rights available and also less space for competitive differences.

Who will be earning money then? EEX, Nordpool, Powernext, who hope to attract the major energy players? ECX, aiming for the big petroleum boys? I give Climex a good chance, because the great majority of the players on the emissions market are rather smaller, mostly with less than 1 million tons of emission rights. This group will adopt an economical attitude to their emission rights and to transaction costs. They will want to use a trading platform that can respond to the needs of the users. Moreover, with Climex the companies can show that, at the end of day, it’s an environment-driven market. You can earn money here, but it costs something too.

3. Diary

19 January, New Values Masterclass Emissions Trade, Frankfurt Airport
international masterclass for traders of large companies, see www.newvalues.net for more information. Or contact csdesk@newvalues.net / tel: +31(0)20 305 4073.

Climex Workshops in Germany: 21 January in Berlin, 26 January in Frankfurt, 27 January in Düsseldorf.
You can read all about these in the New Values Community. Direct registration with Michael Klein: mklein@500ppm.com

Emissions Trading Developing Effective Risk and Trading Strategies for 2005 and Beyond, 14-15 februari in central London
By Marcus Evans.

Baker & McKenzie Workshop on Emerging Issues in JI and CDM Deals, 16 februari in Londen
8.45am until 2pm - info Laura.Farnese@Bakernet.com.

1-3 March, Carbon Market Insights 2005, Amsterdam.
By Pointcarbon