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THE CARBON MARKET: Managing the Risks & Capturing the Opportunities. Measurements that Matter ™. 1. Presentation Overview. To review the Carbon Market, Offsets, and Credits Address Regulatory and Reporting Issues The Jomini Response: Measurements that Matter™

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The carbon market managing the risks capturing the opportunities

THE CARBON MARKET:

Managing the Risks

&

Capturing the Opportunities

Measurements that Matter™

1


Presentation overview
Presentation Overview

To review the Carbon Market, Offsets, and Credits

Address Regulatory and Reporting Issues

The Jomini Response: MeasurementsthatMatter™

Develop the Strategy: Risk or Reward

Eliminate the “GreenWash”

Marketing Advantage, Economic and Positional Value: The ROGI™

Strategies in Action: Case Study (MotorSilk™, IIG, Canadian Tire, AAF)

Questions

2


Key principles
Key Principles

Green Demand Continues to Grow

Increasing consumer demand for green products and greener operations creates significant market opportunities- strong economic drivers

The pursuit of profits and the aversion to the cost of energy and volatility of fuel prices

Going Green Requires Collaboration

Greener product creation affects everything

R&D processes to manufacturing, supply chains, packaging, marketing and infrastructure—as well as relationships with customers, partners and shareholders

Proactive and Progressive Steps are Key

Avert legislation, regulation and consumer backlash and promote a green image

Corporate “Peer-to-Peer” Pressure

Productivity and Efficiency = Cost Benefit

3



Kyoto protocol greenhouse gases targeted
Kyoto Protocol: Greenhouse Gases Targeted

Green House Gas (GHG)

Green House Gas (GHG)

Description

Description

By far the most important GHG

By far the most important GHG

Carbon Dioxide (

Carbon Dioxide (

CO2)

CO2)

.

.

Generated from burning fossil fuels and

Generated from burning fossil fuels and

deforestation.

deforestation.

Over 80% of US GHG emissions comes

Over 80% of US GHG emissions comes

from

from

CO2 generated from burning fossil

CO2 generated from burning fossil

fuels

fuels

Methane (

Methane (

CH4)

CH4)

Comes from landfills, coal mines, oil and

Comes from landfills, coal mines, oil and

natural gas operations, and agriculture.

natural gas operations, and agriculture.

Nitrous oxide (N20)

Nitrous oxide (N20)

Emitted from the use of nitrogen fertilizers,

Emitted from the use of nitrogen fertilizers,

from burning fossil fuels and from some

from burning fossil fuels and from some

industrial and waste management

industrial and waste management

processes

processes

Sulfur hexafluoride (SF6)

Sulfur hexafluoride (SF6)

Used in the electrical insulator, freezing

Used in the electrical insulator, freezing

agent, heat conductor.

agent, heat conductor.

Hydroflurocarbons

Hydroflurocarbons

(

(

HFCs

HFCs

) and

) and

These are groups of gases Used as

These are groups of gases Used as

alternative to ozone

alternative to ozone

-

-

depleting CFCs in

depleting CFCs in

Perfluorocarbons

Perfluorocarbons

(

(

PFCs

PFCs

)

)

refrigeration systems

refrigeration systems


Carbon market review
Carbon Market Review

Discussion from Earth Summit (1992)

Kyoto Protocol (1997)

Gov’t of Canada responsibility: GHG Quantification and Reporting of GHG Emissions and Removals Standard

Adoption of ISO 14064 Standard at COP/MOP 2005

Process ‘sold’ to CSA: accepted by International bodies, i.e. GHG Protocol, ASTM, trading platforms etc.

Clean Development Mechanism (CDM): International Trading

EU ETS: 2005: Growing pains to 68% world market

World market (2009): €136 Billion (€ 11.40 weighted average)

Chicago Climate Exchange/RGGI/CAR; Alberta*, BC

Pending Legislation/Copenhagen Accord

Voluntary Reporting: Carbon Disclosure Project (CDP)

6


Carbon offsets
Carbon Offsets

  • There are 2 fundamental types of carbon instruments :

    • Allowances

    • Project-based credits

  • Allowances are generally used for compliance with government schemes

  • An allowance is a permit to emit a quantity of CO2e (normally 1 tonne)

  • Project-based credits can be used for both compliance and voluntary activities

  • A project-based credit represents an emission reduction below a baseline (‘business as usual’)

  • Most credits / allowances are NOT interchangeable with each other for regulatory purposes

  • Prices vary widely between instruments

2008

2012

2008

2012

7


Trading and use of offsets
Trading and Use Of Offsets


The carbon market managing the risks capturing the opportunities

National Trends:

Legislation vs Regulation

9


The perfect storm congress epa corporations and the consumer
The Perfect Storm:Congress, EPA, Corporations and the Consumer

Increased Scrutiny – Regulatory/Public concern on emissions

07/12/09: Massachusetts vs. EPA formally declares CO2 a “DangerousPollutant”

Mandatory reporting requirements at 25K tonnes (4,500 passenger vehicles)

Annual emission reports starting in 2011 for the calendar year 2010 (13k facilities)

02/23/10: EPA announces Phased Approach to Regulation

Targeting large facilities in early 2011; medium-sized emitters Q3 2011; smaller emitters 2016

Consideration now to raising the emissions thresholds in its proposed “tailoring” rule to exempt more facilities

02/12/10: U.S. Securities and Exchange Commission’s issues new climate change disclosure guidance

Business must now report on how climate change will impact their businesses and how it poses new challenges for them

10


Converging forces canada and the united states
Converging Forces: Canada and the United States

06/10/09: Canada issues rules for claiming GHG emissions or “offsets” that will form the basis for a national carbon market

Federal System is to complement and not duplicate Provincial Market

Based on Provincial methodologies, ISO, and CDM Standards

07/20/09: Canada sets deadline for emissions reporting:

Emitters to report 2009 emissions by June 2010

Facilities in excess of 50,000 tonnes GHG emissions to report

Alberta moved to same threshold reporting target

31/01/10: Announced Copenhagen Accord Targets

“Harmonized” approach with the US

11





Potential carbon liability by sector
Potential Carbon Liability by Sector

12%

Carbon costs at $28.24* per tonne of CO2e would equate to at least 1% of revenue for 109 companies.

For the five most Carbon Intensive sectors costs would average between 1% and 12% of revenue

For 32 companies, carbon costs would equate to over 5% of revenue.

10%

8%

6%

4%

2%

0%

Source: Investor Responsibility Research Centre Institute

15


Wal mart
Wal-Mart

Wal-Mart Taps CDP for Emissions Reporting in Sustainability Index

News Release

(Little Rock, ARK, July 16, 2009) Wal-Mart's top executive said Thursday that the world's largest retailer hope a new effort to develop eco-ratings for products the company sells can result in international sustainability standards that all retailers can apply to all suppliers.

Highlights:

Wal-Mart exec foresees eco-ratings for all

As Wal-Mart goes, so goes the world. When it comes to carbon emissions reporting, the $406 billion retailer appears to be suggesting that suppliers go through the Carbon Disclosure Project.

Additionally, Wal-Mart sees its new sustainability index leading to a universal standard that can be applied across “all retailers, all suppliers,” said Wal-Mart chairman and CEO Mike Duke.

“We see this as universal — this is not a U.S. standard,” Duke said during a July 16 meeting to unveil the firm’s new sustainability index.

16



The carbon market managing the risks capturing the opportunities

Integrated Solutions

ISO14064 Project Leadership through Jomini Green Filter™

Development of ISO14064 Process Conformance Green Plans and Programmes

Deliver economic and marketing benefits

From ROI to ROGI™

International Projects: CDM in Asia, Africa

North American Regulated (Alta, BC, RGGI)

North American Voluntary (VCS, ISO)

Federal Offsets for Compliance

  • Technology company involved in commercialization of new technologies

    • Government and Private Research & Development

  • Established “Jomini Network™” as a result of partnerships from interaction seeking or providing unique technology applications/services and products

  • Provide Solution Sets resulting in Sustainability Opportunities based on ISO14064Conformance and Jomini Green Filter™ Review

18


Overview the jomini network technology deployments
Overview: The Jomini Network &Technology Deployments

Manufacturing

Automotive Parts: Magna International Inc., Martinrea International Inc.

Automotive OEMs: Japan and Europe

Process Engineering

Vehicle Performance

Irving Oil/ Canadian Tire

Transportation

Rail: Bombardier/ CN Rail/ CPR/ Amtrack

Shipping/Intermodal/Rail Operations

Trucking and Transport

Large Canadian/US Fleets

Retail

Canadian Tire/Walmart/Mars

  • Other Segments

  • Energy Efficiency Bundles and Solutions: ISO, VCS

  • Wind, Solar and Roofing Technologies: ISO, CAR

  • Waste to Energy: CDM, JI, ISO, VCS, RGGI, CAR

  • Forests Protection:

    • 4 National Government REDD Projects

  • Equipment Recycling

  • High Heat Insulation: Oil and Steel: ISO, VCS

  • HVAC and Lighting Systems: ISO

  • Hydrogen OEMs

  • Run-Of River Hydro: CDM, ISO, VCS, ACR

  • Waste Oil Recovery

  • Transportation Solutions/Technology: ISO, ACR

  • Power Supply Solutions

  • Diversion and Landfill Quantification

19


The jomini difference a leading advisor
The “Jomini Difference™”: A Leading Advisor

Corporate

Market Leader

  • International Scope & Broad environmental Reach

  • Environment Compliance

  • Technology Commercialization

  • Access to World Markets

  • Establishment of the Jomini Sustainability Network

  • Driving force in Industry Standards and Protocols: IPOG, US Government*

  • Expertise in Offset Projects and Key Verticals [Renewable Energy, Forestation, Waste, Air Quality, Transportation]

  • Significant R&D investment

  • IP Asset Management

Expertise

Partner Management

Verdecon Capital Inc.

  • Unique GHG Qualifications

  • Proven ability to work with CDM, VCS, CAR, ACR, EU ETS, REDD Standards

  • Corporate Sustainability Programmes

  • Strategic Marketing for Competitive Distinction

  • Accelerated ROI Models & Carbon Trading Execution

  • Bennett Jones, LLP: ISO Standard ‘Framers’

20


Areas of focus
Areas of Focus

Corporate Facilities Plan

Purchasing and Acquisitions

  • Quantify to Maximize Value from ‘Day to Day’ activities

  • Replicate Best Practices as Green-Print for Facilities/Operations

  • Infrastructure Projects

  • Deploy Clean-Tech/e²-Bundles

  • Better Cost Management and Operational Savings

  • ROI of Proposals include Carbon Market Returns

  • Due Diligence to Include Environmental Risks

  • Assess all Energy Sources

  • Intelligence with Environmental Regulation

  • Understand Supply Chain Procedures*, Transport etc.

  • Products that have Achieved ISO Process Conformance

R&D Activities

  • Employee Programmes to Assist in Corporate Objectives

  • Positive Economic and Marketing Returns from Off-Setting Carbon Footprint

  • Deployment of Quantified and Proven Solutions to Meet Sustainability Initiatives

Offset Programmes

  • Unique GHG Confirmation

  • Assess Value of Solution from GHG Quantification of Reductions

  • Meet OEM and Consumer Needs

  • Accelerated ROI Models

  • Renewable Energy Projects and Sources

21



Proprietary process programmes
Proprietary Process & Programmes

GHG Process Conformance

Jomini

Environmental

Inc.

Jomini

Environmental

Inc.

Independent

Third Party

Canadian

Standards

Association

Jomini

Environmental

Inc.

Jomini

Environmental

Inc.

Independent

Third Party

GHG Credit Exchange

Business

Strategy

& Planning

Project Plan

&

Assertion

Validation

Project Plan

Registration

Monitor,

Report &

Register

Verification

Aggregation

Trading

GreenPrint

Assessment™

(GPA)

Project Phase:

Making of an ERR

Trading Phase:

Making of a VERR




Strategic opportunities
Strategic Opportunities:

Regulated Entity

Energy

Efficiency &

Renewables

(Wind)

Transportation

Credit

Credit

Credit

Credit

Credit

Offset Aggregation Verifer

Waste Water

Management

Reforestation

Credit

Credit

Credit

Low Carbon

Fuel

Production

Energy

from

Waste/Tailings

Reduced

or

No Tillage

26


Supply chain decarbonization
Supply Chain “Decarbonization”

Source: 2008 World Economic Forum

27


Greenwashing runs rampant
Greenwashing” Runs Rampant

98% of Products’ Green Claims are Misleading

ONLY 2% of products claiming in some way to be “green” actually measure up

The number of big box store products making green claims has grown 79% since 2007

“Greenwashing” has become an international challenge

Source: TerraChoice April, 2009

28


Greenwash or green
“GreenWash” or Green

Green.wash (green’wash’, -wosh’) – verb: the act of

misleading consumers regarding environmental practices of a

company or the environmental benefits of a product or service.

29


Marketing value

Strengthen Competitive Position

Define/re-define Market Position Internationally

Competitive Differentiation

Meet Consumer/Client Requirements

Establish Leadership Position

Review Pricing Strategy

Establish clear leadership through increased Market-Share

Make use of “ISO14064ProcessConformance” moniker, or other statement depending on Standard and Registry

Ability to Register in multiple markets for Environmental market Conformance

Marketing Value

30



Case study
Case Study

A Jomini Sales CorporationSolution

Technology developed for NASA at Argonne National Laboratory (US Department of Energy Research Facility)

The Boron CLS Bond™, a patented

Self-renewing

High-performance

Biodegradable

Anti-corrosive

Bottom line impacting

Lubricant and surface coating

friction reduction technology

Winner:

Environmental Technology Partnership Award

R&D 100 Award

32


Motorsilk engine treatment
MotorSilk™ Engine Treatment

One-time use; passivates the metallic surface

Crystal Lattice Structure creates Boundary Layer with Co-efficient of friction: 0.01

Delivers8% improvement in fuel efficiency for in-use vehicles

Decreases emissions through reduction in engine wear (elimination of wear metals)

4-8 hour drive-time to form boundary layer

Biostat/Anti-corrosive/Anti-oxidant

Displaces varnish, carbon and sludge in used equipment

Prevents deposit formation in new equipment

Solution is 100% Biodegradable

33


Motorsilk co 2 e results
MotorSilk™ CO2e Results

Project Assertion: High Level of Assurance: ISO Process Conformance

Calculated Results for 200,000 Kms:

OEM First Fill (10 years @ 20k Kms): 3.67 tonnes CO2e

Same for Automobiles and Fleet Vehicles (Driven Kms Dependant)

Trucks Short Haul: 120,000 Kms 16.76 Tonnes per annum

Trucks Long Haul: 240,000 Kms 33.52 Tonnes per annum

CarQuest: 6110 vehicles: 14.5% improvement in fuel efficiency

Currently Trading in New York: 32,000 Tonnes

Now aggregating for Nestlé Waters (USA), Inter-State Trucking etc.

Currently Being Deployed at Kraft (USA):

2500 Trucks to be treated (Class 6, and Class 8)

34


The carbon market managing the risks capturing the opportunities

Do This Today

Will Do This in 12 Months

Within the next 12 months many companies will change how

they engage with their suppliers

Usage of Supplier Management Processes

(% of respondents)

Joint Process Improvement

Track a Set of

Sustainability Metrics for Major Suppliers

Require 3rd Party Certification for Major Suppliers

Reward Supplier Practices

Source: A.T. Kearney & Institute for Supply Management

35



Green winners
“Green” Winners

Sources: Bloomberg, AT Kearny Analysis

37


Iso 14064 overview
ISO 14064 Overview

Accepted as the Standard

ISO 14064-1: Specification for Quantification and Reporting of GHG Inventories and Carbon Footprint

Organization Level

ISO 14064-2: Specification for Quantification, Monitoring and Reporting of GHG Emission Reduction and Removal Enhancements

Projects

ISO 14064-3: Specification for Validation and Verification of GHG Assertions

These principles are successfully employed by Jomini to Technologies, Products, and Energy Efficiency Applications Across the Globe … able to meet CDM/VCS requirements

38



The carbon market managing the risks capturing the opportunities

In The News

Going Green

  • Three-quarters of Canadians take into account the environmental impact of their actions when buying a product

  • The same proportion (75%) also believes that most environmental claims are just marketing ploys

  • More than 85% want standards enforced and support labelling regulations

  • Far more consumers would buy green products if they were priced the same as standard items (40%)

  • Most consumers are not convinced that it actually costs more to produce green products

  • Survey showed significant opportunity for companies that can prove their products are eco-friendly - ISO 14064, backed by Jomini

Source: Gandalf Group for Bensimon Byrne, Globe and Mail, July 2008


Areas of interest
Areas of Interest

Strategic Implications: GHG Reporting companies that complete with more carbon efficient peers could lose market share, or risk investor concern

Measuring Direct impacts

Understand “hot spots” in operations

Financial exposure to carbon and other environmental costs

Performance relative to competitors

Measuring Indirect impacts from suppliers

Minimize supply chain exposure

Risks of carbon costs due to inefficiency

Benchmark Performance

Carbon Footprint

Partnership and Jomini Network

Access to technology

41


Areas of interest1
Areas of Interest

General Operations

Facilities/IT Management

Process Activities: Furnaces, Kilns, Milling, Grinding

Energy

Source/Usage

Waste

Tailings/Re-use- W2E

Water

Re-Use

Transportation

On-Site/Truck/Rail/Stand-BY

42