Validated Carbon Credits

Where Profits & Ethics Unite

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WHAT ARE CARBON CREDITS?

 Global Warming means that too many Green House Gases (GHGs) are continuously
being released into the Earth’s atmosphere, trapping heat and increasing the Earth’s
temperature. It is generally believed that this has been caused largely by human
activity over many years since the start of the Industrial Revolution with the result of
witnessed and recorded melting ice caps, rising sea levels and extreme weather
patterns, etc.

 A carbon credit is the financial instrument that represents 1 metric ton of GHG that
has been reduced, stored or avoided. This can be achieved by any organisation that
has produced the technology to attain this sequestration (a wind farm for example)
and that is recognised and recorded by credible sources as having done so.

 The ultimate goal of purchasing carbon credits is to offset emissions by “retiring” the
credits so that they can never be purchased or sold again and that the emissions they
represent are removed forever.

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 WHY BUY CARBON CREDITS?

 Emissions trading, which is also called cap and trade, has evolved as a means of reducing the
amount of GHGs released into the Earth’s atmosphere utilizing a market based approach. Since
many countries now have their own emission reduction targets to achieve, caps have been
placed on industries on the amount of pollution they are allowed to release. If they produce more
than permitted they will either have to reduce their emissions themselves, which may involve
considerable expense investing in technology and machinery to achieve this, or they will have to
purchase carbon credits to offset their emissions from a verified source in order to comply.

 When petrol prices increased significantly in the US, so did sales of hybrid “green” energy
saving cars like the Toyota Prius. When petrol prices came down again so did the sales of the
hybrid cars.

 The fact is that people are more interested in saving money than saving the planet so
introducing financial incentives is perceived to be the most effective way forward by both
governments and the private sector alike.

 “To truly transform our economy, protect our security and save our planet from the
ravages of climate change, we need to ultimately make clean, renewable energy the
profitable kind of energy.” President Barack Obama

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THE KYOTO PROTOCOL
 This historic meeting in 1997 attended by 160 nations in Kyoto, Japan, was the
baseline to establish a way of cutting GHGs on a global scale.

 Many nations had targets set to reduce their emissions with the onus on
developed countries who were deemed to be principally responsible for releasing
the most pollution to date.

 The largest carbon emissions market is currently the European Union Emissions
Trading Scheme (EU ETS) created in 2005 in compliance with Kyoto.

 Although not yet ratified by America, President Obama has pledged that the US
will reduce it’s emissions by 20% lower than 2005 levels by 2020 and 83% lower
by 2050. Many experts believe that a similar cap & trade market to Europe will
have to be implemented to help achieve this and is expected to happen within the
next 2-5 years. Currently, California is leading the way with their system being
phased in.

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TYPES OF CARBON CREDITS
 There are basically 2 types – VERs & CERs

 A CER stands for Certified Emission Reduction and is a certificate issued by the
Clean Development Mechanism (CDM) as part of the Kyoto Protocol. Each certificate
represents 1 metric ton of GHG that a project in a developing country has reduced,
stored or avoided, enabling a developed country to purchase in order for them to
comply with their own capped targets in line with Kyoto.

 A VER is a Voluntary Emission Reduction, the concept the same as above, but
outside the Kyoto Protocol regime. However, these projects have been assessed
and validated by objective third parties and placed on public registries. Although
currently smaller than the CER market, the growth by the private sector is already
mushrooming with expectations within the industry that it could even overtake the
compliance market, especially with the increasing corporate social responsibility
being demonstrated by non compliant businesses around the world. With Australia
recently announcing the introduction of their own cap and trade programme in 2012,
the expectation is that they may well continue to buy VERs of VCS and Gold
standard in addition to CERs as they already do under their NCOS scheme that is
currently in place.

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CONDITIONS & STANDARDS OF VERS

 Additionality:
This means that the credit must represent a true reduction emission over and above the normal
“business as usual” scenario.

 Sustainability:
The 2 objectives in the compliance market are to reduce the emissions and contribute to
sustainability and the voluntary market, driven by buyers who are concerned with price and value,
are often even more sensitive to this.

 Verifiability:
An independent, objective third party must verify the project to confirm it has genuinely reduced
emissions. These are usually carried out by various large, international organisations accredited
to the UNFCC or professional, often globally recognised, accounting / auditing and consulting
firms.

 Reliability:
This is a key area of concern for anyone purchasing a VER in order to make sure that it has not
been “double sold.” Therefore it should be officially registered on one of the recognised, central
public registries.

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NOW IS THE TIME – The Experts
 New York Times:
“Carbon Trading is one of the fastest growing specialities in Financial Services.”

 Louis Redshaw, Barclays Capital:

“Carbon will be the world’s biggest commodity market & it could become the world’s biggest market overall”

 CFCT Commissioner:
“Carbon trading may dwarf that of crude oil within 5 years, worth 2 trillion”

 President Barack Obama:

“There is no better potential driver that pervades all aspects of our economy than a new energy economy... That’s
going to be my No. 1 priority when I get into office”

 Fortune:
“JPMorgan isn't alone. All the big global investment banks including Barclay‘s, Citigroup, Goldman Sachs and
Merrill Lynch are hurrying into carbon finance”

 Chris Leeds, Head of Emissions Trading, Merrill Lynch, London

“Carbon could become one of the fastest growing markets ever, with volumes comparable to credit derivatives
inside of a decade“

 Barclays PLC
“United Nations Carbon Credit prices may rise as much as 42% by 2012”

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IN OUR VIEW.....
 With the huge pressure on the US to join the rest of the world in developing methods to reduce their
enormous emissions, particularly with the additional pressure of China announcing the launch of their
own carbon trading market in 2012, we believe it is not a matter of “if” the US will introduce their cap
& trade system but “when.” For investors wishing to participate in this exciting new market and gain
the highest returns, investing early before further cap and trade schemes are introduced around the
world in the coming years means that they will be well positioned to profit handsomely.

 With voluntary credits trading relatively low at present we firmly believe that those with the foresight
to enter now realistically stand to earn very good returns with some market specialists quoting the
possibility of high returns within the next few years.

 All voluntary credits are set to increase in value because, at the Copenhagen COP15
conference in 2009, the Kyoto Protocol failed to be extended beyond 2012. The CDM
credits born out of the protocol may, therefore, cease to exist so the marketplace is now
rushing to buy voluntary credits to mitigate this situation and diversify their portfolios.

 The Voluntary Carbon Market is a great starting point due to low cost entry and recognised and
identifiable carbon standards, true and transparent verifications by credible third party organisations
and official public registries and exchanges.

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 WHO WILL BUY MY CARBON CREDITS?
 In the compliance market, companies, governments and other entities purchase carbon offsets to comply with
regulation.

In the voluntary market, individuals, companies and governments buy offsets to mitigate their emissions from
transport, electricity consumption, etc.

 Companies often purchase carbon credits for corporate branding and to raise their profile. It is increasingly
popular for businesses to advertise themselves as carbon friendly / neutral or display the types of projects
they have invested in to assist global warming issues, improve bio diversity and help local communities in
developing countries. Even major artists and rock bands buy carbon credits to offset their emissions when
touring.

 The other reason for the private investor is the “pre-compliance buy” or those buying in anticipation of
regulation which is expected to happen around the world.

 The world population is increasing at an alarming rate and is expected to reach 9 billion by 2050 and has
quadrupled in the last century alone.

 3% annual global growth rate will result in the doubling of consumption & production of food and other
commodities within the next 25 years.

 Limits imposed by law on GHG emissions globally will undoubtedly continue to increase. Already when you
buy products and services you are often asked if you want to offset your emissions (when booking a flight for
example). So less emissions allowed and more people and products polluting will drive the demand and need
in the marketplace considerably.

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SUMMARY.....
 We only select high quality carbon credits of VCS and Gold Standard.

 We choose projects that we believe represent the best value for our clients whilst
paying careful consideration to the merits of each project regarding the true impact
on the environment and the local communities.

 After several months of due diligence, we ensure that every project we put in front
of a client has been verified by a reputable and recognised entity and is officially
registered and, therefore, traceable and trackable throughout.

 We do not promise or guarantee returns but we do believe that, what we offer

exposes our clients to the least possible risk whilst offering the best potential for
maximum profit.

 All our carbon credits are SIPP compliant.

 ISA’s coming soon!!

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FOR MORE INFORMATION.......
Tel: +44 (0) 208 123 3115
Email: info@validatedcarboncredits.com
Web: www.validatedcarboncredits.com

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