Netherlands Ministry of the Environment and Automated Credit Exchange Conduct First-Ever, Rate-Based NOx Emission Trading Simulation.

Business Editors

MAASTRICHT, Netherlands--(BUSINESS WIRE)--Feb. 14, 2001

More Than 125 Participants From the Netherlands and Belgium Take Part

in Exercise to Simulate New Rate-Based Emission Trading Program

Designed to Allow for Economic and Energy Growth

More than 125 participants from the Netherlands and Belgium, including more than 30 Dutch and Belgian companies, have successfully completed the first electronic simulation of a novel, rate-based emission trading program for nitrogen oxide (NOx) reductions.

The Netherlands Ministry of Housing, Spatial Planning and the Environment (VROM) and the Automated Credit Exchange(TM) (ACE) developed and conducted the simulation exercise. KPMG Netherlands organized and facilitated the event.

The first-ever simulation took place Feb. 6 and 7 in Maastricht at the site where the European Union signed its historic treaty. Fittingly, the simulation participants included industry and government representatives from the Netherlands and Belgium. Norway was also represented. The exercise allowed participants to experience how a proposed Netherlands rate-based emission-trading program would assist them to cost-effectively reduce NOx emissions.

"Our successful simulation was a first -- bringing together expertise from the Netherlands and California to place our regulatory program into working form -- electronically. It's the next step in developing our NOx emission trading program," said Chris Dekkers, senior policy advisor of the Climate Change and Industry Directorate of VROM.

"Working in a partnership with industry, we have established a strong framework for this new program. The simulation allowed those who will be subject to the program to see how it functions, to learn more about its design, and give us their informed comments. We are also very satisfied that our colleagues from the Belgian Ministry of Environment (Aminal) and representatives from the Belgian industry joined us in our experiment," Dekkers added.

"This simulated trading gave us an excellent, hands-on understanding of how emission trading works," noted Henk van Wouw, Shell Netherlands manager of environmental affairs and chairman of the industry working group which has been cooperatively developing this program with the VROM.

"It has shown us how to look at our strategies and our control technologies, and plan our investments using the marketplace. We received very positive comments from all those attending -- best of all, that they understand the advantages of the program," van Wouw added.

The Netherlands program is designed to use market forces to rapidly achieve NOx emission reductions in the most cost-effective way possible for industry -- an approach not yet common in Europe. It is doubly unique in that it was structured to also accommodate economic growth, which no other programs accomplish well.

Rather than a traditional "cap-and-trade" approach -- which gives existing market participants a guaranteed emissions level but restricts growth and future entry by new companies -- this modified rate-based structure would establish a steadily tightening performance standard rate (PSR) of emissions per unit of energy.

It then uses an innovative market-based adjustment mechanism to take into account fluctuations in energy use. Entities that perform better (emit less pollution per unit of energy) than the standard would have credits to trade. The results: a trading system that allows for economic and energy growth while encouraging cleaner technologies, as well as providing rewards for early action.

"The proposed Netherlands program design is a product of innovative economic thinking combined with firm regulatory standards," said Dr. Anne Sholtz, president and chief executive officer of ACE. "It has been a pleasure assisting government and industry leaders who are willing to work together to find these solutions.

"As a result, companies were very engaged in the simulation. They had good questions, they had clearly studied their emission control options and costs, and they were seeing how they could use the added flexibility of a marketplace to help meet their compliance requirements," Sholtz added.

The Netherlands NOx emission trading program is currently being reviewed by the Government of the Netherlands for possible implementation by 2003.

The Netherlands Ministry of Housing, Spatial Planning and the Environment (VROM) is recognized globally as a leading and innovative environmental planning and regulatory agency. The Netherlands recently served as the host of the Climate Change negotiating meetings (COP-6) at The Hague.

The Automated Credit Exchange(TM) (ACE) is the world's oldest and leading electronic exchange designed for trading environmental emissions credits, based on "smart" market software -- a spin-off of research developed for NASA via the Jet Propulsion Lab. To learn more about ACE, its structure and how its markets operate, or to become a market participant, visit the company's Web site at www.acemarket.com.

ACE is the environmental exchange subsidiary of eonxchange(TM), an economic thought-ware company that invents, builds, licenses and operates smart electronic market-based exchanges, founded on advanced economic theory, mathematics and software design. Its proprietary Electronic Optimizing Network exchanges are specially designed and proven to handle the trading of the newest emerging commodities from the environmental, media and financial markets.