EXECUTIVE SUMMARY Prosperous opportunities abound for UK and Florida investors and developers willing to tackle global climate change. UK Trade & Investment at the British Consulate-General in Miami, The Greater Miami Chamber of Commerce and Enterprise Florida, hosted a conference on Renewable Energy in Miami, Florida. The conference, “Trends in Global Innovation and Finance: The Tools of Technology Meet the World’s Energy Challenge,” addressed how recent developments in the industry are creating business opportunities for the UK and Florida and influencing global finance systems. The UK and Florida’s shared commitment to address climate change, coupled with each region’s comparative advantages and innovations, highlighted the conference’s objectives of promoting the continued innovation of renewable energy sources through international cooperation. Climate change is a global issue that requires a global solution. As a result of geographical and innovative core competencies, Miami is poised to position itself at the epicentre of the global renewable energy market. Coupled with London’s determined policies to reduce global warming, the UK and Florida promise to lead the movement to seek and discover the newest and cleanest energy technologies. The UK believes that climate change is the greatest long-term challenge facing the world today. Further, recognizing that the UK is facing a decline in indigenous energy supplies and is transitioning towards becoming a net energy importer, London intends to produce 20 percent of electricity through renewable energies by 2020. At the “Serve to Preserve Florida Summit on Global Climate Change,” held on 23 July, 2007, Florida Governor Charlie Crist and UK Special Representative for climate change, John Ashton, signed a partnership to tackle global climate change. Additionally, Florida Governor Charlie Crist signed three executive orders directing cuts in GHG emissions from energy consumption in Florida. The governor will request the state adopt a 20 percent by 2020 Renewable Portfolio Standards (RPS) with a focus on solar and wind energies. The partnership is expected to increase sector-related trade between Florida and the UK. HM Consul-General Keith Allan welcomed the conference participants and recognized the efforts and leadership of Florida Governor Charlie Crist and Miami Mayor Manny Diaz in addressing climate change. Mr Allan also paid tribute to recent developments in Florida, such as Citrus Energy’s plan to convert citrus waste into biomass feedstock for ethanol production, and FPL’s plan to develop a massive solar plant in the state. Florida Energy Secretary Michael W. Sole cited examples of how Florida is proactively addressing global warming based on Governor Crist’s executive orders. Addressing the potential impact of renewable energies on Florida’s economy and businesses, Mr Sole made a comparison to the dotcom era, calling this a “Second Industrial Revolution,” whilst claiming that there will be no shortage of profitable ventures for those with vision and an entrepreneurial spirit. Miami Mayor Manny Diaz detailed how Miami has taken the lead as a green city of the future. Miami is one of the original signators of the “U.S. Mayor’s Climate Protection Agreement, and has

adopted a Climate Protection Plan, which calls for greener transportation and infrastructure for the immediate future. Sir Alan Collins, Director-General for UK Trade & Investment in the USA reaffirmed the UK’s commitment to combat climate change and to lead by example whilst analyzing how the debate over climate change has transitioned from science to policy and, now, to investment. Matthew Partridge, Senior Biofuels Consultant for Wood Mackenzie Inc., addressed concerns surrounding biofuels and discussed key issues for their development. Analyzing the various drivers that are pushing biofuels forward as an alternative to fossil fuels, Mr Partridge argued that the best strategy for bringing the next generation of biofuels to market is through small, incremental steps. The panel on Trends in Next Generation Biofuels, examined industrial biotechnology trends and new research developments in biofuels and low carbon power generation. The speakers agreed that there is a great need to identify as many Second-generation biofuels as possible whilst allowing market forces to dictate the eventual winners. The next panel, Power Generation from Renewable Sources, explored broad trends in emerging technology areas such as marine, wind, photovoltaic, solar and clean coal energy. The presentations emphasized the importance of partnership and collaboration in developing a large number of alternatives to satisfy present and future energy needs. Michael O’Sullivan, Senior Vice President of FPL Group, discussed the current state of wind and solar projects in the US. Whilst FPL Group understands that wind is not a silver bullet, investment in the sector has increased steadily, and particularly so during the 2007 calendar year. The following panel addressed Greenhouse Gas Mitigation Strategies: Links to Policies and Markets. The speakers offered insights into policy and regulatory frameworks and their effects as they spur innovation and technology adoption. Carbon emissions trading has emerged as a profitable endeavour for companies, investors, and industries and is a necessary step for national and state governments as well as the wider international community.

The fourth panel presented on clean energy finance trends and examined the characteristics of viable clean energy projects and future growth opportunities. The presentations focused on investment and development potential in Latin America and the Caribbean. Jorge L. Arrizurieta, Chair of the International Policy Group and Governmental Consultant at Akerman Senterfitt, presented on Florida’s role in the development of biofuels for the hemisphere and beyond. Stressing Florida’s geographic advantage and other competencies, as well as the solid UK-Florida commercial relationship, Mr Arrizurieta emphasized the state’s unique opportunity to be at the epicentre of biofuel research and development. Throughout the conference, the presenters expressed confidence in market forces. The conference demonstrated that market-sensible developments are being made and that profitable investment opportunities exist. As demand for biofuels and clean energy solutions continues to rise in the UK, Florida, and the world, UK Trade & Investment, The Greater Miami Chamber of Commerce, and Enterprise Florida will help encourage the market to strengthen and mature and will continue to strive to identify best prospect solutions.

REPORT TRENDS IN GLOBAL INNOVATION AND FINANCE: THE TOOLS OF TOMORROW MEET THE WORLD’S ENERGY CHALLENGES Background UK Trade & Investment at the British Consulate-General in Miami, The Greater Miami Chamber of Commerce and Enterprise Florida, hosted a conference on Renewable Energy in Miami, Florida. The conference, “Trends in Global Innovation and Finance: The Tools of Technology Meet the World’s Energy Challenge,” addressed how recent developments in the industry are creating business opportunities for the UK and Florida and influencing global finance systems. The UK and Florida’s shared commitment to address climate change, coupled with each region’s comparative advantages and innovations, highlighted the conference’s objectives of promoting the continued innovation of renewable energy sources through international cooperation. Climate change is a global issue that requires a global solution. As a result of geographical and innovative core competencies, Miami is poised to position itself at the epicentre of the global renewable energy market. Coupled with London’s determined policies to reduce global warming, the UK and Florida promise to lead the movement to seek and discover the newest and cleanest energy technologies. The UK believes that climate change is the greatest long-term challenge facing the world today1. Further, recognizing that the UK is facing a decline in indigenous energy supplies and is transitioning towards becoming a net energy importer, London intends to produce 20 percent of electricity through renewable energies by 2020. Additionally, the UK requires that electric companies obtain “Renewables Obligation Certificates (ROCs), meaning that renewable energy companies have two sources of income in high demand---the sale of energy and the sale of ROCs2. Moreover, under the Renewable Transport Obligation (RTFO), the UK has established a goal whereby 5 percent of total transport fuel must be from renewable sources3. In 2005, transport accounted for around a quarter of UK energy consumption and for 27 percent of greenhouse gases (GHGs)4. At the “Serve to Preserve Florida Summit on Global Climate Change,” held on 23 July, 2007, Florida Governor Charlie Crist and UK Special Representative for climate change, John Ashton, signed a partnership to tackle global climate change. The state will exchange delegations with the UK and Germany to share public policy experiences, to exchange science and technology concerning renewable energy sources and energy efficiency, and to discuss and promote initiatives that broaden the Kyoto Protocol.

1 HM GOVERNMENT, CLIMATE CHANGE: THE UK PROGRAMME 2006, available at www.defra.gov.uk/ENVIRONMENT/climatechange/ 2 “Why wind power in the UK? Wind Energy Fact Sheet 2. www.berr.gov.uk/files/file17775.pdf 3 “All cars will run on “biofuel mix by 2010” By Ben Webster. Nov. 2005. The Times Online. http://www.timesonline.co.uk/tol/news/article585544.ece 4 Banister, David. “Reducing energy use in UK transport.” Transport Studies Unit Oxford University Centre for the Environment. Sep. 2007.

Governor Crist also signed three executive orders directing cuts in GHG emissions from energy consumption in Florida. Further, the governor will request the state adopt a 20 percent by 2020 Renewable Portfolio Standards (RPS) with a focus on solar and wind energies. The partnership is expected to increase sector-related trade between Florida and the UK. The UK enjoys the largest wind source in Europe. Capitalising on this comparative advantage, as well as on attractive tariffs and an expanding supply chain, the UK wind energy sector is rapidly developing. Whilst the UK wind energy capacity currently sits behind several European nations---Germany, the world’s leading wind energy nation has over 20 gigawatts (GWs) of wind energy capacity; 10 times as much as the UK5---the Government deems this sector vital to achieve the UK’s energy goals. A concentrated focus on funding is aimed at ensuring that policies are in place to attract private investment, assist project finance through long-term power purchase agreements and stimulate activity through capital grants. The Offshore Wind Capital Grants Scheme has provided a total of £117 million to fund the early development of offshore wind farms. On December 10, 2007 Energy Secretary John Hutton announced plans to expand Britain’s offshore wind power generation. The draft plan could allow companies to produce up to 33 GWs of wind energy6 .

Florida ranks third nationally in total energy consumption, with 8.6 million gallons of gasoline per annum. Currently, there are countless solar energy businesses, separated by solar product type such as solar electric power systems, solar water heating systems and photovoltaic (PV) modules; 7 biomass energy businesses; 2 renewable energy investment and financial services; and 21 wind energy businesses. Juno Beach, Florida based Florida Power & Light (FPL), the principal subsidiary of FPL Group, Inc., operates the largest wind farm in the world. Horse Hollow Wind Energy in Texas runs 421 wind turbines and has a capacity of 735 megawatts (MW). HM Consul-General Keith Allan welcomed the conference participants and recognized the efforts and leadership of Florida Governor Charlie Crist and Miami Mayor Manny Diaz in addressing climate change. Mr Allan also paid tribute to recent developments in Florida, such as Citrus Energy’s plan to convert citrus waste into biomass feedstock for ethanol production, and FPL’s plan to develop a massive solar plant in the state. Further, Mr Allan noted that 75 percent of all CO2 emissions are generated by the largest cities in the world, and commended London’s green efforts leading up to the 2012 Summer Olympic Games and beyond. Representing Florida Governor Charlie Crist, Florida Secretary for Environmental Protection and Chairman for the Governor’s Action Team on Climate Change, Michael W. Sole, praised Florida’s efforts to address the issue with actions rather than words7. He stressed the importance of international cooperation in dealing with environmental challenges, as well as the value of learning from experience. In that regard, he credited the UK, thanked Mr Allan, and

5 “UK wind power reaches milestone” BBC News. 9 Feb. 2007. http://news.bbc.co.uk/2/hi/science/nature/6344215.stm 6 “UK govt unveils plans to expand offshore wind energy.” www.forbes.com/markets/feeds/afx/2007/12/10/afx4422734.html 7 Florida Department of Environmental Protection’s Action Team reports can be found at http://www.dep.state.fl.us/climatechange

REPORT commended the knowledge gained from discussing cap-and-trade in the UK and the EU, along with carbon markets, with Head of UK International Emissions Trading, Jill Duggan, as the state contemplates adopting a European-style carbon trading system in conjunction with California and other proactive states. Further, Mr Sole cited examples of how Florida is proactively addressing global warming based on Governor Crist ’s executive orders: more energy efficient new buildings; a concerted plan to incrementally reduce GHGs by 2025; a more fuel-efficient government vehicle fleet; the installing of solar panels at the Governor’s Mansion; and, pending expected Environmental Protection Agency (EPA) approval, the adoption of vehicle emission standards. Addressing the potential impact of renewable energies on Florida’s economy and businesses, Mr Sole made a comparison to the dotcom era, calling this a “Second Industrial Revolution,” whilst claiming that there will be no shortage of profitable ventures for those with vision and an entrepreneurial spirit. Miami Mayor Manny Diaz thanked Governor Crist and the event’s sponsors and called for greater action on global warming by Washington. Recognizing that the issue must also be addressed at the city-level, Mayor Diaz detailed how Miami has taken the lead as a green city of the future. Miami is one of the original signators of the “U.S. Mayor’s Climate Protection Agreement8, and has adopted a Climate Protection Plan9, which calls for greener transportation and infrastructure for the immediate future. The city is replacing 200 fleet vehicles with flex-fuel models and now requires all new buildings over 50,000 sq ft to be LEED certified at the silver level10. The presentation concluded with a call for individuals to assist governments by taking initiatives to reduce carbon emissions. Sir Alan Collins, Director-General for UK Trade & Investment in the USA reaffirmed the UK’s commitment to combat climate change and to lead by example. Citing the Stern Review11, Sir Alan analyzed how the debate over climate change has transitioned from science to policy and, now, to investment. The Stern Review, a report conducted by economist Sir Nicholas Stern for the British government, concluded that GHGs could be reduced cost-effectively and that the price of inaction was far too great to justify. Further, the Stern Review concluded that enormous business opportunities will be generated out of tackling the issue. Noting that the UK has a promising track record of reducing harmful emission whilst stimulating economic growth and that the 2006 Florida Energy Act is promoting capital investment and accelerating utilization of renewable energies in the state, Sir Alan called for entrepreneurs and businesses on both sides of the Atlantic to forge partnerships and relationships in order to meet the challenges posed by global warming.

8 For more information, please visit: http://www.seattle.gov/mayor/climate 9 www.miamigov.com/cms/mayor/4060.asp 10 For more information, please visit: http://www.miamigov.com/msi/pages/GreenBuildings/default.asp 11 HM TREASURY, STERN REVIEW ON THE ECONOMICS OF CLIMATE CHANGE (2007), available at http://www.sternreview.org.uk

From left to right: HM Consul-General Keith Allan, Director-General UK Trade & Investment USA, Sir Allan Collins, Miami Mayor Manny Diaz, and Florida Energy Secretary Michael W. Sole. Matthew Partridge, Senior Biofuels Consultant for Wood Mackenzie Inc. addressed concerns surrounding biofuels and discussed key drivers for their development. His presentation, “Biofuels: Energy Security, Climate Risk and Oil & Gas Markets,” began with a discussion of whether biofuels are a “panacea” or a “Pandora’s box.” Key benefits of biofuels include lower GHG emissions; biodegradable and non-toxic qualities; and improved vehicle performance. Key concerns include water scarcity; competition for food; deforestation; and toxic-run off from agriculture. Despite these concerns, key drivers, such as the environment, tenuous energy supply security, and government policies are pushing biofuels forward as an alternative to fossil fuels. Mr Partridge noted that due to current infrastructure, the US is expected to demand substantially more ethanol whilst Europe will continue to demand biodiesel. Further, Mr. Partridge argued that the best strategy for bringing biofuels to market is through small, incremental steps. The panel on Trends in Next Generation Biofuels, examined industrial biotechnology trends and new research developments in biofuels and low carbon power generation. Sean O’Hanlon, Executive Director of the American Biofuels Council, chaired the panel. He cautioned that the transition to biofuels will not be smooth and that there is no single biofuel that will meet all energy needs. The speaker suggested that the closest prospect could be biobutanol, which is 13.5 times less evaporative than gasoline and six times less evaporative than ethanol, and can be transported on current US infrastructure. The panel concluded overwhelmingly that there is a great need to identify as many Second-generation biofuels as possible while allowing market forces to dictate the winners. Raul Parisi, Vice President for Dynamotive Latinoamerica, briefly introduced and described “BioOil,” which the company claims is the only Second-generation industrial biofuel in the market. According to his presentation, “Industrial Fuels from Biomass: Redefining the Energy Matrix,” BioOil is produced by converting organic residues such as forest and agricultural wastes through a pyrolysis process—the decomposition of residue caused by a thermal reaction. BioOil can currently be used for power and heat generation and is expected to be used for transportation in the near future. Dynamotive Energy Systems is headquartered in Vancouver, Canada with offices in the UK, the US and Argentina. Dr Jose R. Moreira, Senior Advisor for MGM International, discussed the challenges in bringing Second-generation biofuels to market. His presentation began with a discussion of First-

REPORT generation successes such as sugarcane ethanol usage in Brazil and corn ethanol in the US. Developing countries, however, are largely unable to compete using feedstock crops. Additionally, agricultural prices have proven to be historically volatile. Despite solid gains made by First-generation biofuels, demand for fossil fuels is up. Second-generation sources are needed to compensate for the competitive shortcomings of the present array of market-ready biofuels. The market cost of Second-generation biofuels is expected to be one of the bigger challenges facing the sector. It is unlikely that prices will be below those for sugarcane and corn ethanol. Dr Moreira concluded by reaffirming that there is room for, and a necessity for, all biofuels in order to tackle climate change. The next panellist, David Stewart, CEO of Florida-based Citrus Energy, praised the efforts to connect US businesses with European experience in addressing climate challenges. Further, he commended the enthusiasm shown by Florida’s businesses and the support provided by the state. His presentation, “Live Green Go Orange: Producing ethanol and co-products from citrus residue,” detailed how Citrus Energy has been working on the development and commercialization of citrus waste from Florida’s citrus industry as a biomass feedstock for ethanol production. The company has also partnered with FPL Energy to build a $10 million commercial scale citrus waste-ethanol plant. Mr Stewart added that he envisioned the potential development of a dozen similar plants in Florida attached to factories that produce citrus juices. Eventually, citrus peel ethanol could replace 1 percent of Florida’s fuel consumption. Recognizing that citrus waste ethanol is a niche rather than a wide-ranging solution, Mr Stewart reaffirmed the panel’s belief that there are no silver bullets in solving our energy needs through biofuels, and that all options are welcomed. Comparing the current state of biofuels to the rise of the computer industry, Mr Stewart called for more commercially viable alternatives to come to market. Sam Shepherd, Director of Eco-Solids International, an Anglo-American technology development company, discussed the prospects for algae oil. All algae plants are carbon neutral or negative. Algae production captures CO2 and converts it into oil for bio-diesel feedstock. Further, algae can produce all the oil needs of the US in a non-arable area the size of Maryland. Whilst solid gains are being made, currently, the high cost of production has prevented algae oil from entering the marketplace. The next panel, Power Generation from Renewable Sources, explored broad trends in emerging technology areas such as marine, wind, photovoltaic, solar and clean coal energy. The panel was chaired by David Day, Director of Technology Licensing for the University of Florida. Mr Day announced that with the world’s fuel usage on the cusp of change, tomorrow’s challenges can be met with technology being developed today. In addition, he stressed that profitable renewable fuels can be produced from biomass. The University of Florida has a working profitable cellulosic plant in Japan that converts waste wood from deconstruction of homes into ethanol. Dr Edward Green, CEO of UK-based Green BioLogics, highlighted the attributes of biobutanol in his presentation “Re-commercialising the butanol fermentation.” Dr Green reaffirmed

biobutanol’s potential as a a sustainable and environmentally friendly biofuel that is expected to become a leading road transportation solution within 5-10 years12. Biobutanol has a higher energy density than ethanol, and is also less corrosive, less volatile, and closer to gasoline and diesel. Further, it more closely fits existing fuel infrastructure and can be blended with gasoline, diesel as well as ethanol and biodiesel. Cost reduction challenges facing biobutanol’s ascent to market include reducing feedstock costs and improving fermentation efficiency. Dr. Green concluded that the winners in the current attractive biofuel investment climate will be those companies that can fill a supply chain in collaboration and partnership. The next panellist, Dr Larry Lemanski, Vice President for Research at Florida Atlantic University (FAU), presented on “Florida’s Ocean Energy.” Oceans, which cover more than 70 per cent of the earth, are the largest and best solar collector on the planet and absorb the energy equivalent of 250 billion barrels of oil each day. Florida is the closest major load centre to the Gulf Stream, the most energy dense ocean current with a power potential equivalent to 4-8 nuclear power plants (4-8 GWs). Dr Lemanski noted that ocean thermal energy holds great potential for Florida’s large coastal population as it can help reduce energy consumption through cold water based air conditioning and can be used to generate large volumes of potable water. Within 10 years, ocean energy could begin to be provided in commercially meaningful amounts.. Within 20 years, ocean-generated electricity could significantly offset and help replace fossil generation. Moreover, ocean energy could enhance the state’s energy independence by replacing imported hydrocarbons with Florida’s ocean current energy while establishing a vibrant new industry for Florida and the nation. Ocean energy has the potential to eliminate tens of millions of metric tons of CO2 gas production per annum. With the UK firmly entrenched as a world leader in tidal and wave power research, and in the spirit of partnership and cooperation, Dr Lemanski led a delegation to the UK in late October 2007 to meet with UK counterparts. Cindy Tindell, Executive Director of Development for FPL Energy, presented on why “We need more renewable energy.” With most of the state’s population living within 10 miles of the 1,200-mile coastline, Florida faces a grave challenge to reduce its carbon footprint and develop renewable energies to offset global warming. While precipitous and rash actions would be extremely costly, there are technologies that are proven, tested, and reliable. Ms Tindell recounted FPL Group’s various investments in 18 states, ranging from wind to solar to renewable energies, such as Citrus Energy’s ethanol plant. Currently, only a negligible percentage of ethanol is used as transport fuel in Florida. Statewide adoption will only occur if and when consumers, along with industry and business suppliers, demand it.

12 For more on biobutanol and the BP-DuPont partnership to commercialize biobutanol, please refer to: Hargreaves, Steve. “Better than ethanol.” CNNMoney.com. Apr. 3, 2007. www.money.cnn.com/2007/04/02/news/economy/biobutanol/index.htm

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Citrus Energy’s Mark Stewart with FPL’s Cindy Tindell. Michael O’Sullivan, Senior Vice President of FPL Group, discussed the current state of wind and solar projects in the US. Whilst FPL Group understands that wind is not a silver bullet, investment in the sector has increased steadily, and particularly so during the 2007 calendar year. The 2007 US wind market is expected to approach 4,000 MW capacity, equalling $6-8 billion in invested capital. Currently FPL Group’s wind investment total nearly $6 billion. Despite all the investment gains, only 0.6 percent of US energy comes from wind. One of the fastest growing trends in the wind energy sector, particularly in the Northwest and Midwest US, is rate-based wind, where utilities build wind farms and operate them in their own service territories without external contracting. Further, Mr O’Sullivan stated that solar energy does not currently enjoy the popularity of wind energy because it is costlier and more time consuming to initiate a given project. For instance, a modest output 250 MW solar facility’s building cost can range from $700-900 million. Further, solar facilities require a far more complicated supply chain that can take years to consolidate. Nevertheless, FPL Group runs and operates a 310 MW solar facility in the American Mojave Desert, which is the largest solar installation in the world. Mr O’Sullivan concluded his presentation by reiterating FPL’s mission to provide low-cost power in Florida and to make investments outside the state that make economic sense—citing this as one of the main reasons why FPL is not bullish on photovoltaic (PV), a solar power technology that uses solar cells to convert sunlight directly into electricity. Following Mr O’Sullivan’s discussion, the next panel addressed Greenhouse Gas Mitigation Strategies: Links to Policies and Markets. The speakers offered insights into policy and regulatory frameworks and their effects as they spur innovation and technology adoption. John Mackle, Chief Financial Officer for MGM International, chaired the panel and discussed the merits of a cap-and-trade scheme that allows for market flexibilities, rather than the movement of capital through political means, to promote clean air. Carbon emissions trading has emerged as a profitable endeavour for companies, investors, and industries and is a necessary step for national and state governments as well as the wider international community. As a financial commodity, carbon emissions represent a growing $30 million international market. Further, Mr Mackle noted how the Kyoto Protocol is a good example of a working market mechanism. A major issue is how such mechanisms will work in the US given current substantial

tax incentives for clean energy. A key concept is whether carbon-reducing credits can be considered “additional.” Additional, determines whether carbon credits are the main motivation behind a given project. The Executive Board in Kyoto also interpreted renewable energies as an additionality. Dr David Hunter, Director of US Policy for the International Emissions Trading Association, IETA presented on the prognosis of the American Congress adopting cap-and-trade legislation. Recognizing that GHG trading schemes provide the most efficient means of achieving environmental objectives, that long-term policy certainty is necessary to achieve cost-effective reductions, and that the broad use of offsets and linkages to a global carbon market are the best ways to contain costs, Dr Hunter expressed optimism that cap-and-trade legislation would eventually be approved by Congress. On December 6, 2007 the Senate Environmental and Publics Work committee passed America’s Climate Security Act of 2007, which would create a cap-and-trade system for carbon emissions and mandate a 70 percent cut in GHG pollution by 205013. The next panellist, Dr Alex Rau, Principal for the Climate Wedge and Cheyne Carbon Fund, discussed the opportunities presented by GHG emission reduction. Noting that a cap-and-trade scheme essentially creates property rights for emitting carbon into the atmosphere, Dr Rau mentioned that any investment and/or strategy which leads to manufactured, verifiable reduction in GHG emissions has an intrinsic value in the form of “carbon assets.” There are four general types of carbon assets: allowances; carbon credits; project finance; and technology. Allowances refer to the reductions in overall emissions of a regulated entity under a carbon cap, whilst credits refer to reductions from specific projects. Moreover, Dr Rau highlighted how the GHG credit market has proven to be the main international driver for carbon reduction in developing countries. The Clean Development Mechanism (CDM), an arrangement under the Kyoto Protocol, allows industrialised countries to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries. Further, carbon reduction projects worldwide have enjoyed a rapid growth in investment fund allocation, particularly since the 2005 inception of the EU Emissions Trading Scheme. Next, Ted Michaels, President of Integrated Waste Services presented on “Waste-to-energy: converting garbage into clean, green power and reducing greenhouse gas emissions.” Currently, most municipal waste is buried in landfills around the country. Whilst landfill gas can be captured and used to produce electricity, modern incineration technology is a more productive method. Mr Michaels noted that for every ton of municipal waste, it is possible to generate 20kw hours of electricity from landfill, compared to 520kw hours from a waste energy plant. Further, one ton of waste burned through a waste energy plant saves one ton of C02 emissions. The waste disposal sector burns 29 million tons of trash per annum. Mr Michaels highlighted how waste-to-energy (WTE) provides a net GHG benefit. WTE avoids harmful methane emissions from landfills, avoids CO2 emissions from fossil fuel combustion, and avoids CO2 emissions from metals recycling. The only downside to WTE is that, compared to landfill waste disposal, plants are

13 http://www.govtrack.us/congress/bill.xpd?bill=s110-2191

REPORT expensive to build. The cost is mitigated, however, once carbon emissions are factored in. With 11 WTE plants, Florida has more than any other state. At present, there are 87 such plants total in the U.S. 30 percent of all waste in the U.S. is recycled, 60 percent is sent to landfills, and 8 percent goes to waste energy. Ian Waller, Managing Director with FiveBarGate Consultants Limited, presented on the UK’s Renewables Transport Fuel Obligations programme (RTFO). Recognizing that there are different cost profiles to saving carbon in different sectors, the UK Government has implemented individual sector-specific mechanisms similar to cap-and-trade schemes. RTFO obliges fuel suppliers to include a proportion of biofuels within their supplies. Certificates are then issued to suppliers below the cap, and can then be traded to those over the cap. Thus, a trading market for transport fuel certificates is established. RTFO also requires suppliers to report on the carbon savings of the fuel as well as the sustainability of the fuel. Mr Waller also discussed the likelihood that the UK will move away from target volume to carbon-based caps by 201014. The fourth panel presented on clean energy finance trends and examined the characteristics of viable clean energy projects and future growth opportunities. Chris Walker, US Director for The Climate Group chaired the panel and highlighted Florida’s rapid ascension as a top player in the global clean energy economy. Mr Walker opined that Florida has moved faster on the issue in the last six months than the EU has in the past seven years. Further, Mr Walker explained that, although investment in clean energy has increased dramatically worldwide, swift acceleration, particularly from the financial community, is needed to meet the explosive demand and opportunities available today. Further alluding to the idea that the clean energy economy is a successor to the IT industry of the 1990s, Mr Walker showed the large number of prominent Silicon Valley players who have invested in green technology companies. Alain Castro, Partner with Uruguay-based Energias Renovables del Sur provided a practitioner’s perspective on investing and developing renewable energy projects in Latin America. Whilst the region was not as proactive as Europe in addressing clean energy issues, investment has picked up recently. Mr Castro showcased his company’s investment in a close-loop ethanol and electricity renewable energy plant in Uruguay that is likely to be the first integrated renewable energy project in Latin America. The plant’s projected output is 150 million litres of ethanol and 10 MW of renewable energy. Mr Castro also presented on some of the challenges faced in establishing a renewable energy project in the region. Calling for a consistent set of laws that provide clear incentives for renewable energy generators, accelerated permitting, and a simpler, faster process for obtaining carbon credits, Mr Castro nevertheless expressed great optimism for the sector-related equity investment in Latin America.

14 Per Mr Waller’s example: this shift would mean that companies would be issued certificates based on their carbon savings rather than by their use of a standard percentage of biofuels (i.e., 20% by 2020).

Next, Matt Cole, partner with Northbay Equity Partners, presented on the characteristics of renewable energy projects that potentially attract equity investors. Mr Cole suggested that investors generally favour banking projects with management teams with relevant industry experience and a strong track record in the industry. Further, equity investors look for companies with proprietary competitive advantages, such as technology, that allow renewable energy to become more cost efficient. Further, Mr Cole noted the importance of a business plan that focuses on exit prospects by identifying the terminal value of the project. Regulatory risks, such tariffs and subsidies to local producers, are common challenges for renewable energy in many markets. Building a business plan that is highly dependent on a regulatory-driven profit stream, places the project at the whim of government volatility. Mr Cole also warned against swings in commodity prices and explained that biofuels are subject to double exposure as a result of oil and energy prices and agricultural cycles. Nevertheless, many European and North American mega-fund firms have been willing to commit capital in partnership with local investors, for renewable energy projects in riskier markets such as Latin America. Per Mr Cole’s recollection, around USD$800 million have been invested in Brazilian renewable energy projects in the past 18 months. In his presentation “Capitalizing on Green Energy Opportunities,” Rodrigo Cordova, President and CEO of Canada-Chile Investments Inc., provided tips on dealing with investors and developers of renewable energy projects. Echoing the panel’s belief that establishing strong local relationships is of paramount importance for foreign investors and developers wishing to do business in Latin America, Mr Cordova highlighted how higher energy prices have promoted investment in new projects in the region. Whilst noting that today’s market is not keen on paying higher energy prices to preserve the environment, Mr Cordova explained that the trend is changing, particularly in Latin America. The panel generally agreed that Latin America is some five years behind Europe and North America in renewable energy development, and that narrowing this gap is an area where companies from the UK and Florida can capitalize, Presenting from an automaker’s perspective, Luis M. Kolster, Director of Public Policy for General Motors Latin America, Africa and Middle East, discussed how GM is counting on ethanol to reduce dependence on foreign oil and improve the environment. In “E thanol Infrastructure, Partnering and Marketing Initiatives,” Mr Kolster explained that GM believes that E85 ethanol has the potential to reduce oil imports if 50 percent of all US vehicles were flex-fuel. To that end, GM has around 2.5 million flex-fuel vehicles on US roads and is planning to expand to 50 percent of total production by 2012. Although the auto industry has doubled fuel economy in the last 30 years, demand for oil has also increased yearly. GM believes that widespread adoption of ethanol will reduce GHG emissions by 20 percent for grain-based ethanol and 80 percent for biomass ethanol that could be produced in Florida. Applying lessons learned from Brazil’s progressive ethanol market, Mr Kolster explained that successful producers need to have customer acceptance, competitive pricing, and availability to consumers through infrastructure. Juan Pablo Bonilla, Coordinator for the InterAmerican Development Bank’s (IDB) Sustainable Energy and Climate Change Initiative (SECCI) introduced the bank-wide contribution to meet Latin America’s and the Caribbean’s request for an expanded role in sustainable energy projects and climate change issues. The region

REPORT faces increasing demand for energy, along with grave challenges over the rising cost of energy and supply reliability. Mr Bonilla explained that SECCI intends to support the region in their quest to find economically and environmentally sound energy solutions by providing loans that stimulate and promote the development and use of renewable energy sources, energy efficiency technologies and practices, carbon finance, and climate change adoption strategies aimed at reducing the region’s climate vulnerability. Building on the panel’s position that regional governments may impede project development, one of SECCI’s priorities is to minimize policy barriers by integrating policy reform with targeted policy and project financing for market transformation. SECCI is funded through a specific IDB SECCI fund and a multi-donor SECCI fund, for which the UK is the first contributor. With vast experience in promoting South Florida’s role as the gateway to the Americas both nationally and internationally, Jorge L. Arrizurieta, Chair of the International Policy Group and Governmental Consultant at Akerman Senterfitt, presented on Florida’s role in the development of biofuels for the hemisphere and beyond. Stressing Florida’s geographic advantage and other competencies, as well as the solid UK-Florida commercial relationship, Mr Arrizurieta emphasized the state’s unique opportunity to be at the epicentre of biofuels research and development.

Akerman-Senterfitt’s Jorge Arrizurieta. Close in proximity, culture, and commerce with countries in Latin America and the Caribbean, South Florida will play a pivotal role in meeting the region’s evolving energy needs. In that spirit, Mr Arrizurieta mentioned the struggle to ratify a US-Brazil Free Trade Agreement and the 54 cents-a-gallon tariff on the country’s ethanol exports to the US, as policies that need to give way to deeper cooperation. Whilst ethanol can play a key part in reducing demand for fossil fuels, the amount that would be needed to replace total consumption is far greater than Florida, or the country, can supply due to the economic reality of highest and best use of land. The challenge, Mr Arrizurieta explained, is for suppliers and consumers to organize and motivate an investment-friendly economic climate. Further, Mr Arrizurieta informed that, unless biofuels become a commodity, they will always be subject to external-factor volatilities. Unlocking the cellulosic code and

bringing products to market will create exciting opportunities for both investors and producers. Throughout the conference, the presenters expressed confidence in market forces. The conference demonstrated that market-sensible developments are being made and that profitable investment opportunities exist. As demand for biofuels and clean energy solutions continues to rise in the UK, Florida, and the world, UK Trade & Investment, The Greater Miami Chamber of Commerce, and Enterprise Florida will help encourage the market to strengthen and mature and will continue to strive to identify best prospect solutions.