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The Forest Protocol & Project Case Study Alligator River Avoided Conversion Project

The Forest Protocol & Project Case Study Alligator River Avoided Conversion Project. California Cap-and-Trade Workshop Climate Action Reserve June 14, 2011. Overview. About Blue Source Forestry Project Commercialization using the CAR Protocol

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The Forest Protocol & Project Case Study Alligator River Avoided Conversion Project

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  1. The Forest Protocol & Project Case StudyAlligator River Avoided Conversion Project California Cap-and-Trade Workshop Climate Action Reserve June 14, 2011

  2. Overview • About Blue Source • Forestry Project Commercialization using the CAR Protocol • Case Study: Alligator River Avoided Conversion Project • Forestry’s Role in the Carbon Markets 2 | Blue Source | A Leading Climate Change Portfolio

  3. About Blue Source Blue Source has built the largest portfolio of North American emission reduction credits and projects. Carbon Credit Portfolio • Leading domestic project development and marketing for over 10 years • 100-200M tonne portfolio (function of specs) • Have sold over 20M tonnes over the past 10 years • Projects sourced from 49 states and most provinces in Canada • Transacted what is believed to be the largest volume voluntary sale to date (9,000,000 tCO2e) • Transacted what is believed to be the highest value voluntary sale to date ($12,000,000) • Federal and state carbon advocacy leadership • Developed the first protocols in numerous carbon categories • More CAR listed forestry projects than any other developer 3 | Blue Source | A Leading Climate Change Portfolio

  4. Forestry Project Commercialization using the CAR Protocol Blue Source has extensive experience in creating and selling tonnes in the market. Speed, technical knowledge, and pricing strategies are central to the service offering • Feasibility Study / Due Diligence • Project Submittal Form • Forest Carbon Inventory – Design and Implementation • Management Plan • Project Design Document (PDD) Development • Verification • Registration • Marketing 5 | Blue Source | A Leading Climate Change Portfolio

  5. Alligator River Avoided Conversion Project • Native forest stands consisting of mixed pine and bottomland hardwoods • Pre-sold tonnes to help achieve near term revenue to landowner • 2,750 Acres in Hyde County, NC • Permit to convert to agriculture • Based on anticipated carbon revenue decided to protect forest via easement instead 6 | Blue Source | A Leading Climate Change Portfolio

  6. Alligator River Avoided Conversion Project A lot of steps: • Designation of Authority Form • Project Submittal Form • Attestation of Title • Boundary Map • Signed Easement • Inventory • Growth Model • Monitoring Plan • Project Design Document • First Verification • Project Implementation Agreement • Initial Registration of Tonnes • Marketing of Project • Ongoing monitoring/verification • Transfer of Tonnes to Buyer Process to date: • First biomass CRTs issued • Verification of first soils-based CRTs underway (ARB stakeholder call confirmed inclusion) • First-of application of protocol – many delays but will be a model for others to follow 7 | Blue Source | A Leading Climate Change Portfolio

  7. Forestry Demand Offset Type (% Volume) Traded in Global Voluntary Market in 2010 Forestry garnered 42% of the market, a total of 29 MtCO2e. 8 | Blue Source | A Leading Climate Change Portfolio

  8. Forestry Supply • Domestic forest offset projects have gained momentum due to primacy as a compliance grade offset in draft regional and federal legislation, strong demand in the voluntary market and inclusion of forestry protocols in all domestic registries. • Vast landscape of project types and geographic diversity • Improved Forest Management (IFM) • Avoided Conversion (AC / REDD) • Afforestation • Reforestation • Potential volume on par with CCS or Renewable Energy • 320 MT/yr US supply (McKinsey, 2007) • Challenges exist in aggregating numerous small projects and landowners 9 | Blue Source | A Leading Climate Change Portfolio

  9. Blue Source – The Nature Conservancy ‘Working Woodlands’ Program Public Benefits Landowner Benefits • No up-front, out-of-pocket costs • Full forest + carbon inventory and assessment • 10-year FSC management plan and certification • 100% of FSC-certified wood product revenues • 50%+ of forest carbon revenues – important new source of annual cash flow • Inclusion in landscape-scale conservation project designed by TNC • Focus and protect public/private investments • Active and engaged landowners • Repair degraded forests; maintain desired conditions • Keep working landscapes working and in private ownership 10 | Blue Source | A Leading Climate Change Portfolio

  10. Blue Source Transaction Structures • Unit-Contingent • Portfolio Firm • Pre-Compliance Diversification • Options • Upfront Financing Considerations • Fixed and Variable Pricing 11 | Blue Source | A Leading Climate Change Portfolio

  11. Thank You! Kevin Townsend Chief Commercial Officer Blue Source P: 801.438.1540 E: ktownsend@bluesource.com 12 | Blue Source | A Leading Climate Change Portfolio

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