Statement to the U.S. Senate Commerce Committee
Hearing on Climate Change
By Dr. Richard Sandor
Chairman and CEO
Environmental Financial Products LLC
Feasibility and Initial Architecture of a Voluntary Midwest
The debate over appropriate actions to address the
risks arising from changes in the Earth’s climate—the “greenhouse
effect”—suffers from two major information gaps. The first is a lack of consensus regarding the damages that could
occur to the environment without action to reduce greenhouse gas (GHG)
emissions. The scientific process may
not precisely predict the nature and implications of climate changes that would
occur if society does not make significant changes in energy and land use patterns
associated with higher levels of GHG emissions. That is, the costs of inaction and the benefits of taking mitigation actions are uncertain.
The second information gap is lack of understanding
of the monetary costs associated with undertaking mitigation to reduce
greenhouse gasses. The absence of hard,
proven data on greenhouse gas mitigation costs reduces the quality of the
climate policy debate.
The nature of the implied cost-benefit analysis
underlying the climate debate suggests that for any particular level of
benefits accruing from action to mitigate climate change, a high cost of
mitigation will lead policy makers to take less action. If mitigation costs are proven to be low,
it appears policy makers would support stronger action to address climate
change. At this time, however, we lack
the data for realizing the costs involved in pursuing climate mitigation
actions.
To help fill this gap, Environmental Financial Products,
in collaboration with the Kellogg Graduate School of Management at Northwestern
University, received a Millennium grant of $374,000 from the Chicago-based
Joyce Foundation in May 2000. With $900 million in assets, the Foundation has
been a longtime and well-respected funder of efforts to protect the natural
environment of the Great Lakes region. The grant, part of a series supporting
work on significant intergenerational issues, enabled us to explore the
feasibility of designing a voluntary market to help answer the second question:
the cost of steps to reduce climate change.
The ultimate objective of the proposed Chicago
Climate Exchange is to generate price information that provides a valid
indication of the cost of mitigating greenhouse gases. By closing the information gap on mitigation
costs, society and policymakers will be far better prepared to identify and
implement optimal policies for managing the risks associated with climate
change.
Overview
and Methodology
This report presents a feasibility analysis and
initial architecture for a voluntary pilot greenhouse gas emissions trading
program that would be launched in the Midwest and expanded over time. The objectives of the pilot
program—hereafter called the Chicago Climate Exchange (CCX)—are:
Proof of concept:
·
demonstrate
the ability to cut and trade greenhouse gases in a market system involving
multiple industrial sectors, mitigation options and countries;
·
initiate
greenhouse gas reductions through a modest size but scalable program;
·
form
a basis of experience and learning for participants;
·
introduce
a phased, efficient process for achieving additional GHG reductions in the
future.
Price discovery:
·
provide
realistic information signaling the cost of mitigating greenhouse gases;
·
enhance
the quality of climate policy decision-making by providing hard data on
mitigation costs to the public and policymakers.
The strategy used to assess the feasibility of a
pilot GHG market relied on several research methodologies. A theoretical economic assessment
accompanied by quantified data guided the structure of the study. The proposed market architecture was
influenced by lessons from other successful emissions, financial, and commodity
markets. The successful USEPA SO2
emissions trading program to reduce acid rain served as a model for the design
of key elements of the Chicago Climate Exchange.
The research is a continuing work in progress. The next step of the process is to
incorporate industry input to refine the initial proposed market terms and
conditions. This process will yield a
working prototype for which an attempt to build a consensus will be
initiated. That consensus design would
represent a functional architecture for the first phase of a market. Implementing the proposed market design and
incorporating lessons from practical experience are core elements of the
program.
The negative effects caused by the release of greenhouse gases are currently not priced. Consumers and businesses do not fully take account of such effects in their economic decision-making because there is no price on the use of the atmosphere. The goal of the proposed pilot greenhouse gas trading program is to establish the market for discovering the price for reducing emissions. The core steps are to limit overall consumption of the atmosphere (GHG emissions) and establish trading in instruments that allow participants to find the most cost-effective methods for staying within a target emission limit. The market price of those instruments will represent a value signal that should stimulate new and creative emission reduction strategies and technologies. Emissions trading is a proven tool that works with and harnesses the inventive capabilities of business.
Reflecting international consensus and successful
precedent, the items to be traded in the pilot market—GHG emission allowances
and offsets—are instruments representing one ton of carbon dioxide (CO2)
or their equivalent (CO2e).
For every ton of CO2 emitted, a participating emission source
must relinquish one allowance or offset.
Potential
For A Market Initiated in the U.S. Midwest
The Midwest represents a microcosm of the U.S. The region’s economy is as large as the
economies of the United Kingdom (U.K.) and the Netherlands combined and has
annual GHG emissions equal to those of the U.K. plus France (1.375 billion tons
CO2). The region’s industrial
diversity—including a broad range of energy, heavy manufacturing, transport,
agriculture, pharmaceuticals, electronics and forestry—make it well-suited as a
starting point for a robust and representative greenhouse gas emissions trading
market.
The feasibility analysis suggested a hypothetical target market covering 20% of all Midwest emissions. The scale of such a market and the proposed GHG mitigation goals are summarized in Table A. The Table portrays a proposed GHG reduction schedule calling for emissions in the first year of a pilot market, 2002, to be 2% below 1999 levels (the baseline year) and falling a further 1% each year from 2003 through 2005.
(in million
metric tons CO2 equivalent)
Estimated Midwest 1999 emissions |
1,375 |
|
1999 emissions of a hypothetical 20% coverage
market |
275 |
|
Cumulative baseline
emissions during 2002-2005 under for the 20% coverage scenario |
1,100 |
|
Cumulative 2002-2005 CCX emissions target for hypothetical 20% coverage program (2% below 1999 levels during
2002, 3% below 1999 in 2003, 4% below in 2004, 5% below in 2005) |
1,061.5 |
|
Four-year
Mitigation Demand (baseline emissions – target) |
38.5 mil. tons CO2e |
The hypothetical 20% coverage Midwest market appears to provide sufficient scale for a pilot market that could be representative of a larger market. Total emissions covered in such a market would equal the emissions of Scandinavia (Denmark, Finland, Norway and Sweden) and would be more than double the emissions covered in the successful internal GHG market operated by BP-Amoco. While broad coverage is an ultimate goal, the main benefits of a pilot—proof of concept and price discovery—can be realized with a modest size but a diverse set of participants.
Table B summarizes the core elements of the proposed market architecture.
Indicative
Term Sheet
Market
Architecture for the Chicago Climate Exchange
|
Geographic Coverage |
2002:
emission sources and projects in seven Midwest states (IA, IL, IN, MI, MN,
OH, WI), offsets accepted from projects in Brazil; 2003-2005:
emission sources and projects in U.S., Canada and Mexico, offsets accepted
from projects in Brazil. |
|
Greenhouse Gases Covered |
Carbon
dioxide, methane and all other targeted GHGs |
|
Emission Reduction Targets |
2002:
2% below 1999 levels, falling 1% per year through 2005 |
|
Industries and Firms
Targeted |
Primarily
“downstream” participants: power plants, refineries, factories, vehicle
fleets; approximately 100 firms initially targeted; individual entities or
operating groups must produce over 250,000 tons CO2e to become a
participating emission source |
|
Tradable Instruments |
Fully
interchangeable emission allowances (original issue) and offsets produced by
targeted mitigation projects |
|
Eligible Offset Projects |
-
Carbon sequestration in forests and domestic soils -
Renewable energy systems activated after 1998 -
Methane destruction in
agriculture, landfills and coalbeds -
Offset projects must be over
100,000 tons CO2e; smaller offset projects
must aggregate reductions to meet the requirement |
|
Annual Public Auctions |
2%
of issued allowances withheld and auctioned in “spot” and “forward” auctions,
proceeds returned pro rata |
|
Central Registry |
Central
database to record and transfer allowances and offsets; interfaces with
emissions database and trading platform |
|
Trading Mechanisms |
Standardized
CCX Electronic Market, private contracting |
|
Trade Documentation |
Uniform
documentation provided to facilitate trade |
|
Accounting and Tax Issues |
Accounting
guidance suggested by generally accepted accounting principles; precedent
exists for U.S. tax treatment |
|
Market Governance |
Self-governing
structure to oversee rules, monitoring and trade |
The following summarizes the mechanics of the
proposed system:
1. Participating emission sources agree to the prescribed emission limits and standardized emissions monitoring and reporting rules.
2.
Participating
emission sources receive a four-year stream of emission allowances equal to
their target emission level.
3.
Emission
offsets may be generated by independently verified GHG mitigation projects.
4.
Starting
in 2002, annual allowances and offset holdings must cover annual emissions.
5.
Participants
can comply by cutting their own emissions or purchasing emission allowances
from those who make extra emission cuts or from offset projects.
6.
Failure
to fulfill commitments triggers automatic non-compliance penalties.
7.
Periodic
auctions and organized trading will reveal market prices.
Tradable emission allowances and offsets exist and
are transferred as records in a publicly accessible computerized tracking
system called the Registry. Each unit
is assigned a unique identification number. A variety of best-practice methods
for measuring or calculating GHG emissions will be applied, including
continuous emissions monitoring, fuel records and mass balance
calculations. Methods for addressing
new entrants and facilities and partial ownership of emission sources have been
proposed but need further refinement based on industry input.
Emission offsets reflect mitigation actions
generated by individual projects undertaken by entities not qualified to be
emission sources (generate less than 250,000 tons CO2e emissions
reductions per year). When possible,
standard rules and conservative reference emission values can be used to
determine offset project effectiveness.
Offsets are earned by undertaking specified mitigation projects that
must be independently verified.
Multiple small offset projects will be grouped into 100,000 ton
pools. Offset projects must follow
standardized registration, reporting and verification processes. This design feature is intended to produce
fungible instruments that will be recognized in other emerging carbon markets.
Examples of eligible offset projects include:
·
Carbon
sequestration from forest expansion, and domestic no-till agricultural soils
and agricultural tree and grass plantings;
·
Electric
power generated by wind, solar and geothermal systems;
·
Methane
capture and destruction (e.g. from agricultural waste, landfills and coal
mines).
Selected categories of offsets can be implemented in
Brazil. This feature allows the pilot
market participants to develop expertise on issues associated with cross-border
transactions, including the opportunity to develop trading across differing
legal and regulatory systems. Brazil
also represents a natural location as it has extensive linkages to many Midwest
businesses, presents a variety of low-cost mitigation opportunities, and its
policymakers are actively preparing for the international carbon market.
Annual auctions of emission allowances will be held
to help stimulate the market and publicly reveal prices. To complement private
contracting, an electronic mechanism for hosting CCX trading will provide a
central location that facilitates trading and publicly reveals price
information. Several existing trading
systems will be considered for use in the CCX market. Trading will be encouraged by provision of uniform trade
documentation and by listing standardized spot and forward contracts on the CCX
electronic market.
Market Administration Issues, Public Policy Context
Administration of the CCX market by an efficient,
corporate style governance system, with an elected Board of Directors and a
strong Chief Executive, is recommended.
The rules structure and decisions of the governing body should be
codified through a Rulebook. Under the
guidance of the Board and the Rulebook, a professional staff should be
responsible for making most operational decisions and managing outside
vendors. In order to assure the market
incorporates current best practices, several expert advisory committees will be
convened, including committees on rules and enforcement; market operations and
technical specifications; and emissions and project monitoring, verification
and audits.
The capabilities of various service providers who
might construct and/or operate an emissions and emissions trading registry were
examined. Discussions have been held
with Environmental Resources Trust, Epotec, PricewaterhouseCoopers and the
Emissions Trading Group in the U.K.
Each group offers potentially attractive features that will be further
examined. EFP has also worked to build
links to other emerging GHG markets (e.g. the UK), multilateral organizations,
national governments, corporations, non-governmental organizations and
financial and commodity exchanges.
Professional research on the accounting and tax
issues associated with participating in the CCX was conducted under subcontract
by PricewaterhouseCoopers LLP. An
extensive body of guidance on both accounting and tax issues associated with
emissions trading has been established in the U.S. Preliminary indicative guidance is provided on proper accounting
and income tax treatment for issues associated with enrollment in the market,
trading, swaps, auctions and participation costs.
A variety of legislative proposals have provided
further indication that participation in CCX will help position participants to
intelligently influence and benefit from possible future regulations. Legislative proposals to require reductions
in power plant CO2 emissions, and to assist or reward farm and
forest carbon sequestration, could introduce a policy environment that provides
competitive advantages to CCX participants.
Industry Outreach, Response
In order to identify potential CCX participants, a database containing salient information on major Midwest emission sources was assembled and screened based on various criteria. Many Midwest businesses have already initiated climate change programs, and some industries, including the electric power industry, are already involved in emissions trading. Approximately 100 companies met the screening criteria. Additional screening identified forty firms that received first-round invitations to participate in forming the market. Sectors represented in this list include: electric power, auto manufacturers, petroleum refining, transport, pharmaceuticals, forest and paper, chemical manufacturers, and computers and telecommunications.
The broad outreach program also involved development
of a CCX website and brochures, thirty conference presentations in eight
countries, ten pieces of print media coverage, four electronic media events,
and three EFP-authored publications featuring CCX.
Thirty-four entities recognized as leaders in their
industries provided a positive response to the invitations to participate in
CCX. Each entity signed a letter indicating
their intent to help form the CCX rules and, if the rules are consistent with
their objectives, to participate in the CCX market. Included are major manufacturers such as DuPont and Ford Motor
Company, leading diversified energy companies such as Cinergy and Calpine,
major international financial entities such as Swiss Re, agricultural
businesses such as Growmark and Agriliance, and Zahren Alternative Power, a
leading landfill gas energy company.
Appendix A provides a brief description of the entities from which a
positive response has been received to date.
High-Level CCX Advisory Board
A high-level Advisory Board has been formed to
receive strategic input from top world experts from the environmental,
business, academic and policy-making communities. Members of the Board include internationally recognized
environmental leaders such as Maurice Strong and Israel Klabin, former
governors of U.S. states (James Thompson and David Boren), and individuals who
have served in senior positions in major businesses and academic institutions,
such as Donald Jacobs and Jeffrey Garten.
The dignitaries serving on this Board can help inform corporate and
governmental decision-makers and contribute to the formation of a robust group
of CCX market participants. Appendix B
provides a brief biographical summary of each of the individuals who have
agreed to serve on the CCX Advisory Board.
Next Steps
The report constitutes an initialization of a market
architecture. It is the first step of
an iterative process to be used in defining and implementing a pilot market.
The next step is to build consensus on the initial architecture by further
incorporating industry input through a Technical Committee comprised of
experts, including representatives of the entities identified in Appendix
A. The subsequent step will be
preparation and launch of the first phase of the pilot market. Further iteration will involve refinement of
market operations based on actual experience with the market, and expansion to
allow increased participation and broader geographic coverage.
Detailed discussions with participants and service
providers will be undertaken in order to identify a consensus on the market
architecture and implementation plan.
This effort will aim to finalize emission baselines, targets,
timetables, as well as rules on emissions monitoring, non-compliance penalties,
new entrants, and jointly owned facilities.
Proposed rules must be finalized for emission offset standards, mechanics
of aggregating offsets and project verification.
A simultaneous effort can be undertaken to select
vendors for the registry and trading platform, and to enroll project
verifiers. The consensus market
design will be codified in the CCX Rulebook, which will also establish the
responsibilities and operating procedures of the CCX governance structure.
Pre-launch preparation of the market will entail
official enrollment of participating emission sources, activation of the
Registry, and placing emission allowances in the accounts of participants. Launch of the market will require initiation
of the emission monitoring and reporting procedures, accepting applications
from offset projects, and activation of the electronic trading mechanism.
Operation of the market during the first year will
include execution of the first auction, acceptance of quarterly emission
monitoring reports, issuance first-year offsets based on independent
verification reports, and the compliance “true-up” subsequent to year end. A process for expanding the market will be established
in order to allow for orderly growth of participation.
Appendix A
Agriliance: Agriliance is a partnership of agricultural producer-owners,
local cooperatives and regional cooperatives.
Agriliance offers crop nutrients, crop protection products, seeds,
information management, and crop technical services to producers and ranchers
in all 50 states as well as Canada and Mexico.
It has sales and marketing offices in St. Paul, Minn., and Kansas City,
Mo. Agriliance, LLC was formed on February 3, 2000, as an agronomy marketing
joint venture between Cenex Harvest States Cooperatives, Farmland Industries,
Inc. and Land O'Lakes, Inc.
Alliant
Energy: Alliant
Energy Corporation is a growing energy-service provider with both domestic and
international operations. Headquartered
in Madison, Wis., Alliant Energy provides electric, natural gas, water and
steam services to more than two million customers worldwide. Alliant Energy
Resources Inc., the home of the company's non-regulated businesses, has
operations and investments throughout the United States, as well as Australia,
Brazil, China, Mexico and New Zealand.
BP p.l.c. is the holding company of
one of the world's largest petroleum and petrochemicals groups. BP’s main activities are exploration and
production of crude oil and natural gas; refining, marketing, supply and
transportation; and manufacturing and marketing of petrochemicals. BP has a
growing activity in gas and power and in solar power generation. BP has
well-established operations in Europe, North and South America, Australasia and
Africa.
Calpine: Headquartered in San Jose,
CA, Calpine has an energy portfolio comprised of 50 energy centers, with net
ownership capacity of 5,900 megawatts.
Located in key power markets throughout the United States, these centers
produce enough energy to meet the electrical needs of close to six million
households. Calpine was ranked 25th
among FORTUNE magazine's 100 fastest growing companies and it was recently
ranked by Business Week as the 3rd best performing stock in the
S&P 500.
Carr
Futures/Crédit Agricole Indosuez: Carr Futures, a subsidiary of Crédit Agricole
Indosuez, is a global institutional brokerage firm headquartered in
Chicago. Carr holds memberships on all major futures and equity markets
worldwide, and consistently ranks among the largest futures brokerage firms in
the world.
Cinergy Corp.: Based in Cincinnati, Ohio,
Cinergy Corp. is one of the leading diversified energy companies in the
U.S. Its largest operating companies, The Cincinnati Gas & Electric
Company (Ohio), Union Light, Heat & Power (Kentucky), Lawrenceburg Gas
(Indiana), and PSI Energy, Inc. (Indiana), serve more than 1.5 million electric
customers and 500,000 gas customers located in a 25,000-square-mile service
territory encompassing portions of Indiana, Ohio and Kentucky. The interconnections of Cinergy's Midwestern
transmission assets give it access to 37 percent of the total U.S. energy consumption.
DTE Energy is a Detroit-based diversified energy company
involved in the development and management of energy-related businesses and
services nationwide. DTE Energy’s principal operating subsidiaries are Detroit
Edison, an electric utility serving 2.1 million customers in Southeastern
Michigan, and Michigan Consolidated Gas, serving 1.2 million customers in
Michigan.
DuPont: DuPont is a science
company, delivering science-based solutions that make a
difference in people's lives in food and nutrition, health care, apparel, home
and construction, electronics, and transportation. Founded in 1802, the company
operates in 70 countries and has 93,000 employees.
Exelon
Corporation
is one of the nation's largest electric utilities with approximately five
million customers and more than $15 billion in annual revenues. The company has
one of the industry's largest portfolios of electricity generation capacity,
with a nationwide reach and strong positions in the Midwest and Mid-Atlantic.
Exelon distributes electricity to approximately five million customers in
Illinois and Pennsylvania and gas to 425,000 customers in the Philadelphia
area. The company also has holdings in such competitive businesses as energy,
infrastructure services and energy services. Exelon is headquartered in
Chicago.
Ford Motor
Company: is
the world’s second largest automotive company.
Its Automotive operations include: Ford, Mercury and TH!NK brands;
wholly owned subsidiaries Volvo, Jaguar, Aston Martin and Land Rover; Mazda (33
percent ownership); and Quality Care and Kwik-Fit. Ford Financial Services, providing automotive financing and other
services, and The Hertz Corporation, providing car rental services, are the
other major components of Ford Motor Company.
Ford’s vision is to become the world’s leading consumer company for
automotive products and services. Ford
Motor Company cares about preserving the environment for future generations,
and is dedicated to providing ingenious environmental solutions that will
position them as a leader in the automotive industry of the 21st
century and contribute to a sustainable planet.
GROWMARK,
Inc.: GROWMARK,
headquartered in Bloomington, Illinois, is a federated regional cooperative
that provides agriculture-related products and services primarily in Illinois,
Iowa, Wisconsin and Ontario, Canada. FS-brand farm supplies and related
services are marketed to farmers in these areas by nearly 100 GROWMARK member
cooperatives. Visit the GROWMARK Web site at www.fssystem.com.
IGF Insurance
Company:
IGF Insurance Company is the fifth-largest crop insurance company. IGF serves
farmers in 46 states and maintains eight service offices nationwide. IGF prides itself in developing niche
products for farmers' risk management needs.
Interface, Inc. Interface is a global
company, producing in 33 manufacturing sites located in the United States,
Canada, the United Kingdom, the Netherlands, N. Ireland, Australia,and
Thailand. Interface produces commercial
broadloom carpet, textiles, chemicals, architectural products, access flooring
systems, and manufactures and sells more than 40 percent of all the carpet tile
used in commercial buildings today.
International
Paper:
With over 12 million acres of land managed in the United States alone,
International Paper is one of the world’s largest private landowners.
International IP has significant global businesses in paper and paper
distribution, packaging and forest products, including building materials.
Iowa Farm
Bureau Federation: The Iowa Farm Bureau is a Federation of 100 county Farm Bureaus in
Iowa. The organization was founded in
1918 and is currently comprised of more than 154,000 member families throughout
the state. Numerous legislative,
educational and service-to-member programs are provided for the members’
benefit. The Iowa Farm Bureau’s mission
is to help farm families prosper and improve their quality of life. It is an independent, non-governmental,
voluntary organization. It is local,
statewide, national and international in its scope and influence and is
nonpartisan, nonsectarian and nonsecret in character.
IT Group, Inc. is a provider of
diversified, value-added services in the areas of consulting, engineering and
construction, remediation and facilities management. Through the Company's
diverse group of highly specialized companies, clients can take advantage of a
single, fully integrated delivery system and expertise to meet their global
environmental needs. Its broad range of services includes the identification of
contaminants in soil, air and water and the subsequent design and execution of
remedial solutions.
Manitoba Hydro is a major energy utility
headquartered in Winnipeg, Manitoba serving 403,000 electric customers
throughout Manitoba and 248 000 gas customers in various communities
throughout southern Manitoba. Virtually all electricity generated by the
provincial Crown Corporation is from renewable water power. We are the major
distributor of natural gas in the province. The Corporation's capital
assets-in-service at original cost exceed $8 billion, making it the fourth
largest energy utility in Canada.
Mead
Corporation
a forest products company with $4.4 billion in annual sales, is one of the
leading North American producers of coated paper, coated paperboard and
consumer and office products, a world leader in multiple packaging and
specialty paper, and a producer of high-quality corrugating medium. In
management of the company's more than two million acres of forests, Mead is
committed to practicing principled forest stewardship and using resources in a
responsible and sustainable manner.
Headquartered in Dayton, Ohio, Mead has more than 15,100 employees and
offices and operations in 32 countries.
Midwest
Generation:
Headquartered in Chicago, Midwest Generation, a subsidiary of Edison Mission
Energy, owns 13 electricity generating units in Illinois and Pennsylvania. With
a total generating capacity of over 11,400 megawatts, Midwest Generation can
generate enough electricity to meet the needs of more than 13 million homes. Midwest
Generation is exclusively in business to sell wholesale power in competitive
electricity markets. The company is
currently undertaking a major program to reduce emissions from its coal-fired
plants.
National
Council of Farmer Cooperatives: NCFC’s mission
is to protect the public policy environment in which farmer-owned cooperative
businesses operate, promote their economic well-being, and provide leadership
in cooperative education. NCFC remains
the only organization serving exclusively as the national representative and
advocate for America’s farmer-owned cooperative businesses.
NiSource Inc., is a holding company with
headquarters in Merrillville, Ind., whose operating companies engage in all
phases of the natural gas and electric business from exploration and production
to transmission, storage and distribution of natural gas, as well as electric
generation, transmission and distribution.
Its operation companies provide service to 3.6 million customers located
within the high-demand energy corridor that stretches from the Gulf of Mexico
through the Midwest to New England.
Nuon is one of the largest multi-utility companies in the Netherlands, serving more than 2.5 million residential and
business customers with electricity and, in many instances, with gas, water and
heat as well. The company is in the forefront in the marketing
of green energy and renewable energy generation in the Netherlands and is
extending its knowledge and experience in the area of renewable energy
internationally. Nuon’s activities in the field of renewable
energy include wind power, small hydropower, thermal and photovoltaic solar
energy, landfill gas, biogas, biomass and ambient heat.
ORMAT: ORMAT is the world
leader in distributed reliable remote microturbine power units (also known as
Closed Cycle Vapor Turbo Generators). ORMAT's operations use locally
available heat sources, including geothermal energy (steam and hot water),
industrial waste heat, solar energy, biomass, and low grade fuels.
Pinnacle West
Capital Corp:
Based in Phoenix, Ariz., Pinnacle West is the parent company of APS and
Pinnacle West Energy. APS is Arizona's largest and longest-serving electric
utility, serving more than 857,000 customers, and Pinnacle West Energy is the
company's unregulated wholesale generating subsidiary. Among the utilities
listed in the S&P 500, Pinnacle West is ranked in the top 10 percent for
environmental performance by an international investment advisory firm. The
Company also is ranked in the top 10 percent by Fortune magazine for total
shareholder return over the last five years.
PG&E
National Energy Group, headquartered in Bethesda, Md., develops, owns and operates electric
generating and gas pipeline facilities and provides energy trading, marketing
and risk-management services in North America.
The National Energy Group operates power production facilities with a
capacity of about 7,000 megawatts, with another 10,000 megawatts under
development, and more than 1,300 miles of natural gas transmission pipeline
with a capacity of 2.7 billion cubic feet per day. (PG&E National Energy Group is not the same company as
Pacific Gas and Electric Company, the California utility, and is not regulated
by the California Public Utilities Comission.Customers of Pacific Gas and
Electric Company do not have to buy products or services from PG&E National
Energy Group in order to continue to receive quality regulated services from
Pacific Gas and Electric Company.)
STMicroelectronics:
STMicroelectronics
is the world's third largest independent semiconductor company whose shares are
traded on the New York Stock Exchange, on Euronext Paris and on the Milan Stock
Exchange. The Company designs, develops, manufactures and markets a broad range
of semiconductor integrated circuits (ICs) and discrete devices used in a wide
variety of microelectronic applications, including telecommunications systems,
computer systems, consumer products, automotive products and industrial
automation and control systems. In 2000, the Company's net revenues were $7.8 billion
and net earnings were $1.45 billion.
Suncor Energy,
Inc. is a
Canadian integrated energy company that explores for, acquires, produces, and
markets crude oil and natural gas, refines crude oil, and markets petroleum and
petrochemical products. Suncor has three principal business units: Oil Sands,
Exploration and Production, and Sunoco. Oil Sands produces light sweet and
light sour crude oil, diesel fuel and various custom blends from oil sands and
markets these products in Canada and the United States. Exploration and
Production explores for, acquires, develops, produces and markets crude oil in
Canada and natural gas throughout North America. Sunoco refines and markets
crude oil and a broad range of petroleum and petrochemical products in Ontario
and the United States.
Swiss Re: Founded in 1863 in Zurich, Switzerland, Swiss Re is the world's second largest reinsurer, with roughly 9,000 employees and gross premiums in 2000 of CHF 26 billion (USD$15.3 billion). Standard & Poor's gives the company its AAA rating; Moody's rates it Aaa. Swiss Re does business from over 70 offices in 30 countries. The world over, Swiss Re offers insurers and corporates: classic (re)insurance covers, alternative risk transfer (ART) instruments, and a broad range of supplementary services for comprehensive risk management.
Temple-Inland Inc. is a
diversified forestry, forest products and financial services company. Its three main operating divisions include a
Paper Group, which manufactures corrugated packaging products; a Building
Products Group, which manufactures a wide range of building products and
manages the Company's forest resources consisting of approximately 2.2 million
acres of timberland in Texas, Louisiana, Georgia and Alabama; and the Financial
Services Group, which consists of savings bank, mortgage banking, real estate,
and insurance brokerage activities.
The Nature
Conservancy:
The Nature Conservancy, a nonprofit organization founded in 1951, is the
world's largest private international conservation group. TNC has
protected over 12,089,000 acres of land in the United States.
Waste
Management, Inc. as a leading provider of comprehensive waste management services,
Waste Management serves municipal, commercial, industrial and residential
customers throughout North America. Headquartered in Houston, Texas, the
Company's network of operations includes 284 active landfill disposal sites, 16
waste-to-energy plants, 73 landfill gas-to-energy facilities, 160 recycling
plants, 293 transfer stations and more than 1,400 collection facilities.
Combined, these resources allow Waste Management to offer a full range of
environmental services to approximately 25 million residential and two million
commercial customers nationwide.
Wisconsin
Energy Corporation, headquartered in Milwaukee, Wis., is an $8.4 billion holding company
with a diversified portfolio of subsidiaries engaged in electric generation;
electric, gas, steam and water distribution; pump manufacturing and other
non-utility businesses. The corporation’s utilities subsidiaries serve more
than one million electric and 950,000 natural gas customers in Wisconsin and
Michigan's Upper Peninsula.
ZAPCO: Zahren Alternative Power
Corporation (ZAPCO), recently acquired by U.S. Energy, is among the largest and
most respected developers of Landfill Gas (LFG) projects in the United States.
ZAPCO is engaged in the development, financing, and operation of a large and
diverse group of LFG-based projects, including waste-to-energy electricity
systems, and has executed international trades of greenhouse gas reductions
involving over two million tons CO2 equivalent. ZAPCO operates ten of its twenty-seven LFG
projects in the Midwest U.S.
Appendix B
Biographies of the Advisory Board
David L. Boren is the President of the University of Oklahoma. Mr. Boren has had a distinguished career in public service as a member of the Oklahoma House of Representatives (1967-1975), Governor of Oklahoma (1975-1977) and as a U.S. Senator (1979-1994). As a U.S. Senator, Mr. Boren was the longest-serving Chairman of the Senate's Select Committee on Intelligence. Mr. Boren was educated at Yale and attended Oxford University as a Rhodes Scholar. He also earned a law degree from the University of Oklahoma College of Law.
Lucien Y.
Bronicki is
the Chairman of Ormat International, an Israeli company leader in the field of
innovative technology solutions to geothermal power plants, power-generation
from industrial waste heat and solar energy projects. Mr. Bronicki has been
Chairman of Ormat since he founded the company in 1965. Mr. Bronicki holds
various professional affiliations and memberships, including Chairman World
Energy Council’s Israeli National Committee, Member of the Executive Committee
of the Weizmann Institute of Science and member of the Board of Ben Gurion
University. He is also the recipient of several business and science related
awards.
Ernst Brugger is Founding Partner and Chairman of Brugger Hanser & Partner Ltd.
in Switzerland, a business consulting firm with international experience and
range. He is also a professor at the University of Zurich, chairman and member
of the board of various companies and a member of the International Committee
of the Red Cross (ICRC). Dr. Brugger serves as Chairman of the Board of
Directors of Sustainable Performance Group, an investment and risk management
company which invests in pioneering and leading companies which have taken up
the cause of sustainable business.