IISD Kyoto Mechanisms Seminar

Winnipeg, MB

March 14, 2003

Why Emissions Trading?

• Emissions Trading (“ET”) is a market-based approach to addressing climate change.

• ET provides a price signal.

• ET allows for efficient allocation of resources.

• ET is more dynamic than a regulated approach.

CCE Organizational Structure

The Canadian Climate Exchange• Builds on the expertise of Canada’s only commodity

exchange.

• WCE has extensive experience in:

• Creating, implementing, and facilitating trading in over twenty different cash and derivatives contracts.

• Clearing both futures and physical products.

• Operating as an SRO in a regulated environment.

• Annual WCE trading volume exceeds four million contract sides.

The Canadian Climate Exchange, cont’d…

• Staff of WCE have been working on emissions trading issues for over three years.

• CCE officially launched as a separate entity on February 5, 2003.

• Presently consulting with industry and government.

• Assessing the potential for a Canadian emissions marketplace.

Why trade on an exchange?

• Open, competitive, and fair marketplace.

• Low-cost trading and counterparty risk management (clearing).

• A proven model that facilitates trade for a wide variety of participants.

• Public price discovery.

Why CCE?• Proven track record based on WCE.

• Extensive experience working with industry to create products and markets.

• Skills and understanding on how to keep contracts relevant and functional, in the face of changing requirements and regulations.

• Expertise in operating an SRO model, and dealing with regulators on a provincial, federal, and international level.

Derivatives versus Cash Market

• CCE believes that the logical first step in emissions trading is a cash market, not a derivatives market.

• This is the method used by the majority of existing emissions trading schemes.

• Clearing of cash products can take significantly different forms than clearing of derivatives products.

CCE’s vision• Market-based, low-cost solution to the implementation

of Kyoto Protocol in Canada.

• Products and services that meet industry needs.

• Continual review to ensure ongoing suitability.

• SRO (self-regulating organization) model for the marketplace.

• Ability to expand into additional markets (eg - NOx and SO2)

• Standardization and fungibility with carbon markets in other jurisdictions.

Contact InformationCanadian Climate Exchange

www.canadianclimateexchange.com

Winnipeg Commodity Exchangewww.wce.ca

Bruce Love, Managing Director, CCE Inc.blove@canadianclimateexchange.com(204) 925-5003

Steve Teller, Analyst, CCE Inc.steller@canadianclimateexchange.com(204) 925-5019