ADVISORY/UN Sponsored Plan to Create a Private Emissions Trading Market Is Ill-advised, Says EMA.

MILWAUKEE--(BUSINESSS WIRE)--Oct. 20, 1998--

A Free and Open Trading Regime Is Key to

Greenhouse Gas Emissions Reductions

Today, in an open correspondence to domestic policy makers and international negotiators for the Kyoto Protocol on global warming, the Board of Directors of the Emissions Marketing Association (EMA) reasserted the need to maintain a free and open and market-based approach to the trading of greenhouse gas emissions.

EMA's comments came in response to plans by the United Nations Conference on Trade and Development (UNCTAD) and the Earth Council to move forward with the sponsorship of a governmental organization, which would establish a private or members-only greenhouse gas emissions trading market. Although the UN-sponsored entity, the International Emissions Trading Association (IETA), would be dedicated to advancing emissions trading, it would also be set up as a company for the purposes of creating a closed trading market and certifying its own members' greenhouse gas emissions reductions.

"The IETA clearly overextends itself and, by seeking to establish a closed trading system, could actually stymie the development of a robust greenhouse gas emissions trading market," said Andrew Ertel, of emissions credit broker Natsource, Inc. and vice president of EMA. "It is highly inappropriate at this formative stage of international emissions trading for a UN-sponsored, fee-based membership association to take the role of both forming and managing a closed market."

Encouraging competition in the open market is the best way to bring efficiency and creativity to international greenhouse gas emissions trading, speeding the market's development and maturation. EMA asserts that the IETA should not act to certify emissions credits nor should it serve as a broker of emissions trades, a function best performed by independent private sector entities.

"We urge UNCTAD, Earth Council, and other stakeholders in IETA to abandon their ambitious plans and to focus their resources on promoting emissions trading markets that are open and free--a market where private sector entities bargain at arms-length," said Daniel Chartier of Wisconsin Electric and president of EMA. "Neither UNCTAD nor collaborative membership associations should sponsor, regulate, or control private emissions trading markets."

Last December, international efforts to address climate change resulted in a program, known as the Kyoto Protocol, aimed at limiting the emission of greenhouse gases. International trading of credits arising from reductions of greenhouse gas emissions is a key component of the plan. November 2 - 13 representatives from all governments comprising the U.N. will meet in Buenos Aires, Argentina to discuss the implementation of the Kyoto Protocol. Hammering out the details of the trading system is near the top of the agenda.

"The formation of the IETA is particularly short sighted considering that the basic rules for the international trading system have not even been negotiated," added Mr. Ertel. "Therefore, IETA's closed market approach is not only antiquated in this era of privatization and free markets but it jumps the gun on the international negotiations, as well."

EMA has pledged to lend its support to international forums aimed at bringing together various participants in emissions trading and promoting market-based solutions to issues such as the Kyoto Protocol. EMA envisions greenhouse gas emissions trading evolving in much the same manner as the domestic SO2 and NOx emissions credit market in the U.S. The key to the success of U.S. emissions trading markets has been vigorous bilateral and multiparty trading of independently verified credits in an open market.

The Emissions Marketing Association (EMA) was formed in early 1997 to foster market-based trading solutions for environmental compliance and is also dedicated to supporting the vibrant growth of an open market for SO2, NOx, and other environmental emissions. EMA's international membership include over 100 companies representing emissions brokers, traders, utilities, consultants, coal companies, oil companies, and government representatives.