John,

Good talking with you today.  Per our discussion, please see the information below on examples of commercial activity Enron is undertaking with links to greenhouse gas emissions.  Please let me know if you would like to get in touch with any of the commercial leads on this work.  Many were on the conference call last week, like Elliot Mainzer and Stacey Bolton working on the Renewable Power Desk as well as Heather Mitchell working with EES.

GHG Prices and the Dupont Transaction

I spoke to Natsource regarding the Dupont transaction.  As expected, they could not release the price per ton, but said that they are currently accepting bids at 5 pounds per ton CO2e and offers at 8 pounds per ton CO2e.  The Dupont transaction was a forward trade of 2002 UK greenhouse gas emissions allowances.  Dupont expects to be able to reduce their emissions beyond their obligation under the program, and thus, to be able transfer surplus allowances.

Also, you may find the website below of interest, specifically their analysis on carbon prices.  Please feel free to use my log in ID - ID lisa, PW lisaj.  Given all the uncertainty, I would not rely too much on the figures.

http://www.pointcarbon.com/index.php


Sainsburys and Monetizing GHG Benefits

Other things to think about with regard to participation in the UK climate change programs -- has Sainsburys done any of the following, which would grant them allocations under the trading program:

-signed on to the climate change levy?
-undertaken or considering undertaking a voluntary greenhouse gas emissions reduction target (under the direct entry program)?

A third way to monetize the greenhouse gas benefits would be through the climate change auction -- where mitigation projects are submitted to the UK government for approval and then, once approved, be permitted to generate credits for sale under the trading program.  As I understand it, the project approval criteria has not yet been agreed to.  I have heard that timing on the rules is likely next year.

Certainly, Louis, Diana and others who are watching this closely can provide additional insights.

Understanding Sainsburys' strategy would help to identify any additional roles/opportunities for Enron.

Finally, it is important to consider any additional costs that may derive from new reporting, verification and certification requirements under the emissions trading program.  Depending on the contract, sellers of CO2e credits are often asked to pay for the reporting, etc.

Please keep me posted as your discussions progress and let me know if I may be of further assistance.

All the best,

Lisa

_________________________


Snapshot of Enron Business Activity Related to Greenhouse Gas Emissions

Enron Energy Services:

?	Management's goal for this year in the U.S. and the U.K. is to include broad language in standard contracts that capture ownership of the greenhouse gas and other environmental attributes of its deals.  Key barriers are 1) EES customers cannot easily quantify, or in some cases do not understand, the potential value of environmental attribute credits.  Customers do not want to "give something away for free," and 2) EES does not want to hold up deals.  However, EES has recently closed a deal with Sainsburys (a large supermarket chain) in the U.K. and is exploring, with Sainsburys, participation in the U.K. greenhouse gas trading program in 2002.

Enron Europe:

?	EE is gearing up to participate in the U.K.'s renewable energy and greenhouse gas credit trading systems as well as the European greenhouse gas emissions trading program.  Also, EE is looking to take a long position on renewable energy credits through the development of renewable energy generating units in UK, Greece and Spain.

Enron Global Markets:

?	Coal and Emissions Desk - The emissions desk expresses general interest in greenhouse gas emissions trading, but an established market is months, if not years, away.  In the meantime, the desk seeks opportunities to gain experience with greenhouse gas transactions, but has not taken a position or been a party to a transaction yet.  

Enron Wholesale Services:

?	The Renewable Energy Power Desk has recently closed a significant deal with Andrews Air Force base and is working with other Enron businesses to build a network to transact more deals and to attract customers.  While the desk provides renewable energy credits, these credits will potentially have a larger customer base when the rules for greenhouse gas emissions trading are defined.

Enron Global Services/Enron Transportation Services:

?	ETS has participated in the U.S. Environmental Protection Agency's Energy Star, Natural Gas Leak Repair Program.  ETS has considered capturing and possibly selling methane emissions reductions (as carbon dioxide equivalent reductions) that derive from the leak repairs of its U.S. assets.  Enron Global Services is looking into packing and selling methane reductions from similar projects in Argentina.  If successful, this could be replicable at other international pipelines.

Enron Wind:

?	Contract language exists to capture greenhouse gas credits.  To date, Enron Wind has a 60 megawatt project in Honduras that is expected to sell its greenhouse gas credits.

Portland General Electric:

?	PGE participates in EPA's 1605 (b), Greenhouse Gas Voluntary Reporting Program.  PGE reports about 1 million tons of carbon dioxide equivalent reductions annually and has reported about 5 million tons for projects dating back to 1991.  Half are from demand side management programs, and half are from power plant efficiency upgrades.  The projects are granted a cumulative life of 20 years for their returns.  For the next 17 years or so, PGE will continue to report 1 million tons annually in addition to any projects or efforts that are completed during the report year.  PGE has reported since the inception of the program and seeks credit from the U.S. government for the voluntary reductions it has made and reported.  

Enron Corp.'s Activity with Regard to Emissions Issues

?	Environment, Health and Safety has completed Enron's first greenhouse gas emissions inventory, which includes most U.S. and international assets.  Based on 1999 data, Enron's emissions were 22.1 million tons of carbon dioxide equivalent, based on percent ownership of assets.  EHS works with Corporate Responsibility team to communicate with decision-makers and outside stakeholders as well as position Enron as a business leader on market-oriented solutions to address climate change.

1.	Enron supports binding multilateral agreement on systems to address climate change, provided they are market-based, cost-effective and include worldwide participation (understanding that developing countries may participate under a different structure and timeframe as developed countries) 
2.	Enron develops advocacy strategies consistent with its public climate change statements and with an eye to enhance Enron's risk management expertise and identify new commercial opportunities. 


Lisa Jacobson
Enron
Manager, Environmental Strategies
1775 Eye Street, NW
Suite 800
Washington, DC 20006

Phone: +(202) 466-9176
Fax: +(202) 331-4717