Air Pollution Control Equipment Services, Emissions

Natsource executes first NOx emissions trade under EPA’s SIP call/Section 126 program

NEW YORK, June 11, 2001 — Natsource® LLC announced today that it has completed the first-ever transaction of nitrogen oxide (NOx) emissions allowances under the forthcoming Section 126 and State Implementation Plan (SIP Call) regimes administered by the federal government and 19 Eastern states.

Though the new regulations still face legal challenges, they are expected to impose aggressive new emissions restrictions starting as early as 2003.

The trade brokered today by Natsource involved more than 50 tons per year of NOx allowances spanning the years 2003 through 2007. Parties to the deal agreed on a price of $3,400 per ton. The term of the deal is five years.

“This landmark trade represents the first transaction in what will be a vibrant new NOx compliance market,” said Mike Intrator, head of emissions trading at Natsource. “Although regulatory requirements are a few years out, companies are already devising their compliance strategies and, clearly, emissions trading will be a key component. We expect that the price signal delivered by this trade will help other companies to refine their strategies, leading to further trading activity.”

The transaction was an attempt by companies to prepare for coming emissions restrictions mandated by the Clean Air Act. These would require emissions reductions of in excess of 75 percent relative to historical levels. Parts of the program, known as the SIP Call, are currently under legal challenge and are scheduled to come into effect in 2004.

Nevertheless, most states under the direction of the Federal Government are moving ahead with compliance programs under Section 126 of the Act that will take effect in 2003. The new regulations will cover up to 19 states in the Eastern US, including most of the states that created a successful predecessor NOx emissions market under auspices of the Ozone Transport Commission (OTC). The OTC market has operated since 1999.

“The implementation of SIP plans will place more stringent clean air compliance requirements on a greater number of companies, and emissions markets will play an important role in meeting these requirements,” said Intrator.

Natsource(r) LLC is a leading broker of energy related products and participates in the power, natural gas, coal, weather hedging and emission permit markets. Headquartered in New York, Natsource’s client base includes over 600 global companies who are leaders in the utility, coal, oil and natural gas markets, as well as the investment and commercial banking communities. With its joint venture partner, Tullett & Tokyo Liberty Plc, Natsource has global reach in all of the world’s major financial centers.