CHICAGO CLIMATE EXCHANGE, INC. © 2006

Chicago Climate Futures Exchange™

www.theccx.com

U.S. Sulfur Financial Instrument Futures and Nitrogen Financial Instrument Futures on CCFE

CHICAGO CLIMATE EXCHANGE, INC. © 2006

Sulfur Dioxide (SO2) Market Foundation

The Acid Rain Program was created by Title IV of the 1990 Clean Air Act Amendments and is administered by the EPA

Calls for a 10 million ton reduction in SO2 emissions from 1980 levels, primarily through a cap and trade program

Effected Sources: Primarily Electric Generating Utilities

Annual cap set at 8.95 million allowances

Approximately 10 million allowances transfer annually (between unrelated entities), representing a cash market value over $5 billion

CHICAGO CLIMATE EXCHANGE, INC. © 2006

Nitrogen Oxide (NOx) Market Foundation

NOx Budget Trading Program was implemented in 2003 to address the formation of ground level ozone in the warm summer months (Ozone Season)

Federally mandated cap and trade program, caps emissions at State level

Currently 19 Eastern U.S. states + D.C. in participation

Effected Sources: Electric Generating Utilities, Pulp & Paper Industry, Cement Manufacturing Industry, Oil & Gas Industry...

500 thousand allowances allocated annually

Approximately 500 allowances transfer annually (between unrelated entities), representing a cash market value over $500 million

CHICAGO CLIMATE EXCHANGE, INC. © 2006

SO2 Emission Allowance Price History ($/ton)

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

CHICAGO CLIMATE EXCHANGE, INC. © 2006

NOx SIP Call Emission Allowance Price History ($/ton)

$0.00

$1,000.00

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$6,000.00

$7,000.00

$8,000.00

$9,000.00

CHICAGO CLIMATE EXCHANGE, INC. © 2006

Chicago Climate Futures Exchange™

Chicago Climate Futures Exchange (CCFE™) is a CFTC designated contract market - futures exchange - which offers standardized and cleared futures contracts on emission allowances and other environmental products

Clearing services - The Clearing Corporation

Market surveillance - National Futures Association

CCFE currently lists Sulfur Financial Instrument (SFI™) futures contracts on Environmental Protection Agency (EPA) Sulfur Dioxide (SO²) emission allowances and Nitrogen Financial Instrument (NFI™) futures contracts on EPA Ozone Season (OS) SIP Call Nitrogen Oxide (NOx) emission allowances

CHICAGO CLIMATE EXCHANGE, INC. © 2006

CCFE SFI™ Key Features

Contract Size – 25 U.S. EPA SO2 Emission Allowances

Minimum Tick Size - $0.10 per allowance or $2.50 per contract

Underlying Contract Value $11,725 (03/12 Settlement

$469/contract * 25 tons)

Current Margin Requirements• Prompt Month (Mar07) $1,475 per contract

• Pre 2010 contract expiration $975 per contract

• 2010 & later - $400 per contract

• Spread Margin Credit – 80%

Trading Hours: 7:00 a.m. – 3:00 p.m. CST

Transaction Fees $2.00 per contract per side(Non-Member);$1.60member

CHICAGO CLIMATE EXCHANGE, INC. © 2006

CCFE NFI™ Key Features Contract Size – 5 U.S. EPA NOx SIP Call Emission Allowances

Minimum Tick Size - $1.00 per allowance or $5.00 per contract

Underlying Contract Value $5,250

Current Margin Requirements• Expiration Month (Mar07) $825 per contract

• Non-Expiration Month $550 per contract

Trading Hours: 7:00 a.m. – 3:00 p.m. CST

Transaction Fees $2.50 per contract per side(Non-Member);$2.00 member

CHICAGO CLIMATE EXCHANGE, INC. © 2006

CCFE SFI Volume

0

5,000

10,000

15,000

20,000

25,000

Quarter 1 2006 Quarter 2 2006 Quarter 3 2006 Quarter 4 2006 Quarter 1 2007

Volu

me

(Con

tract

s)

CHICAGO CLIMATE EXCHANGE, INC. © 2006

CCFE SFI Open Interest

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Ope

n In

tere

st (#

con

trac

ts)

CHICAGO CLIMATE EXCHANGE, INC. © 2006

CCFE Clearing Members