What Tricorona Has to Offer

Tricorona’s business concept is to build up a portfolio consisting of a large number of Kyoto Protocol Clean Development Mechanism (CDM) and Joint Implementation (JI) projects, and thereafter to sell the associated emission allowances principally to European industries. Value is added in these transactions as the company identifies early-stage projects, processes the applications to register them with the UN, and monitors progress in each case until the associated emission allowances are issued. By guaranteeing the project owner a set price for the project’s emission allowances over several years, the company provides a financial foundation that makes many of these projects possible. Further value is created for the project proprietor as Tricorona assumes the volume risk associated with each individual project.

Working with Tricorona, the project owner is obliged to deliver the emission allowances that the project actually generates, but has no obligation to deliver emission allowances in unforeseen situations where the project fails to generate any. Tricorona’s customers, in turn, are spared the need to assume the risks of non-production associated with individual projects since Tricorona’s diversified project portfolio spreads these risks among many different projects.

Tricorona works closely with project developers around the world and carries out a comprehensive technical review of every single project. A diversified project portfolio protects the aggregate investment from individual project risks. Most of the projects in Tricorona’s portfolio are contracted to deliver all the emission allowances they
generate for a period of seven or ten years. These terms reflect the UN accreditation regulations for CDM projects, which also apply for a term of either seven or ten years. A seven-year accreditation period can be re-registered twice, giving a total maximum term of 21 years.

In most of Tricorona’s purchase agreements, the company has committed itself to buy—or been granted an option to buy— CERs even after re-registration. Tricorona acquires emission allowances via agreements with project owners, according to which the price is determined today, yet delivery and payment take place at a later date. As the exclusive purchaser of CERs from a specific project, Tricorona obtains a significant degree of influence over the project, thus mitigating many project-specific risks.

Tricorona’s customers can choose either guaranteed deliveries or deliveries from specific projects of varying risk. The offer includes derivatives such as options, structured products and Gold Standard credits.

Projects with Different Degrees of Maturity

As of December 31, 2008, Tricorona’s portfolio comprises of 154 CDM projects, nine less compared to last year. These projects are principally engaged in the field of renewable energy and energy conservation. Every project is subjected to a thorough in-house review process before it can be added to the portfolio. Projects in the portfolio demonstrate different degrees of maturity, i.e. they find themselves at different stages in the CDM process.

Tricorona’s offfer is linked to the CDM project cycle and the current regulatory framework

Two Markets

As described above, the demand for emission allowances originally emerged as a result of the regulations of the Kyoto Protocol. Nevertheless, a parallel “voluntary” market has also emerged. Today, many different parties purchase allowances and can basically be divided into two groups:

Compliance – those who buy CERs to meet their legal or treaty obligations

• Government signatories of the Kyoto Protocol
• Energy and industrial companies subject to the EU ETS
• Participants in certain trading schemes not mandated by the Kyoto Protocol

Voluntary – those who buy CDRs voluntarily for any number of reasons

• Financial parties
• Companies, organizations (NGOs) or individuals who wish to “neutralize” or offset their carbon footprints Financial parties who commercially trade emission allowances for profit for themselves and their clients also support a futures’ market.

These financial parties contribute to increased liquidity and thereby a better-functioning market. Tricorona has established itself as a significant player on this market. Over the last two years, Tricorona has ranked second on the UNEP list of the world’s most active purchasers of CERs. Please see www.cdmpipeline.org/cers.htm for more details. Tricorona is listed there as “Carbon Asset Management Sweden”.

The 20 Most Active Buyers of Allowances from CDM Projects, as of December 31, 2008