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Capital Markets Partnership's Sustainable Investment Initiative
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Capital Markets Partnership Copyright 2008
Sustainable Investment InitiativeGreen & Climate Neutral Buildings Reduced Risk & Higher Valued CollateralGreen Mortgages Cheaper Cost of Capital / Increased LiquiditySustainable Building Securities Certified Sustainable Product InvestmentGreen Building Underwriting Standards
Improve quality of life
FSC Certified Wood Stops Illegal Logging & Irreversible Dangerous Climate Change
Capital Markets Partnership Copyright 2008
Sustainable Investment Initiative
Green Building Financing Program
San Diego Pilot
- $1B mixed use complex- LEED Platinum +- CMP Green Value Score: 77- Section on Bond Offering Official Statement documenting higher value.
San Francisco Pilot
- Existing building refinance to minimum Green Value Score- City, BOMA & CBRE Partners- Cheaper cost of capital pursued
Seattle Pilot
- LEED Gold $300M complex- Public / Private / Mixed Use - Section on Bond Offering Official Statement documenting higher value.
Capital Markets Partnership Copyright 2008
Sustainable Investment Initiative
Green Building Financing ProgramSustainable Building Security- $500M Pool through Freddie Mac- Green buildings qualified by Underwriting Standard CMP Green Value Scores- Section on Bond Offering Official Statement documenting higher value.
California AB 811 Model Resolution
- $200B market - Minimum Green Value Score- Leveraging local government financing with investment bank and investor funds- Cheaper cost of capital pursued
Capital Markets Partnership Copyright 2008
Capital Markets Partnership – Partial List
City of San Francisco
City of Chicago
City of Dallas
City of Denver
City of Miami
City of New York
City of Oakland
City of San Jose
City of Santa Monica
City of Seattle
Capital Markets Partnership Copyright 2008
Capital Markets Partnership
CMP Officers, Chairman, Hon. Gavin Newsom, San Francisco Mayor, USCM
SustainableInvestment
ProtocolOperating
Group
Green Building Underwriting
Standards Committee
Sustainable Investment &
Finance Committee
GHG / Carbon Credit
Monetization Sub-Committee
Education Sub-Committee
Standards Equivalenc
y Sub-Committee
Standards Adoption Sub-Committee
Sustainable Protocol& Underwriting Standards
• Due Diligence Framework
• Green Building Industry Value Rating System©
• $3.2T Institutional Investor Survey
• Business Case (Peer Review)
• Standards Development
• Executive Briefings (Peer Review)
• Consensus Standards Approval
• Green Building Financing
• Product Development
• Market Adoption
Capital Markets Partnership Copyright 2008
Capital Markets Partnership
CMP Officers
Green Building Underwriting Standards Committee
EMERGENCY Consensus Standards Launched in April 2008 by JPMorgan Chase, Wells Fargo Wachovia
Unanimously Approved September 2, 2008
OfficersWade Crowfoot, Director, Climate Change Initiatives, San Francisco Mayor Gavin NewsomSteve Hoffmann, President, Hoffmann & AssociatesRich Pietrafesa, Managing Director, Destiny USATomek Rondio, President, Mortgage GreenMichael Schneider, Vice President, Marxa KuboMario Silvestri, Vice President, Wells Fargo Ken Willis, Vice President & Director, Federal Home Loan Bank of BostonDan Winters, Managing Principal, Evolution Partners
Capital Markets Partnership Copyright 2008
Develop / Finance / Occupy Green Buildings
Capital Markets Partnership Copyright 2008
What is “Green” in the Real Estate Industry?
1. Best business practices– Maximize efficiency aspects in construction /
operations– Minimize waste and costs– Capture ‘free’ inputs from natural
environment– Increased architect / engineer / contractor
coordination
2. Mark of high-quality construction and asset value via several third-party verification processes
3. A product differentiation marker based on:
– Energy and water cost savings – IEQ and associated health benefits– Amenities– Asset quality (perceived / real)
Capital Markets Partnership Copyright 2008
Why Are Investors / Companies Going “Green”? It’s just business……
1. Operational cost efficiency
2. Risk reduction
3. Best management practices
4. Employee productivity
5. ‘Halo effect’
Capital Markets Partnership Copyright 2008
CFO Research Services / Jones Lang LaSalle ReportMarch 2008Top Sustainability Priorities• Improve energy efficiency• Reduce carbon footprint• Reduce environmental impact of
operations• Manage risk
Barriers – CFO / Executive Reponders
• Lack of decision framework / tool• Inability to measure effect on
shareholder value / investor returns• Not integrated into financial
management and control systems
Respondent Quote“As more efficient measuring tools are created and utilized, finance’s role in sustainability efforts will be greatly enhanced.”
Survey Metrics:175 responses – senior finance executives95% from companies w/ over $500MM revenue
Capital Markets Partnership Copyright 2008
Economic Benefits
Projected*Projected* 70% US Commercial Green 70% US Commercial Green Building Market PenetrationBuilding Market Penetration**
Energy Savings & Daylighting: Energy Savings & Daylighting: $36 $36 Billion/yrBillion/yrConstruction Waste Reduction: Construction Waste Reduction: $6.7 B/yr $6.7 B/yr Water Pollution Savings from Water Conservation: $20 B/yrWater Pollution Savings from Water Conservation: $20 B/yrEnergy Savings from appliances & Lighting: $24 B/yrEnergy Savings from appliances & Lighting: $24 B/yrAdded Value from Increased Occupant Productivity Added Value from Increased Occupant Productivity
(5%), IAQ & Reduced Absenteeism: $632 B/yr(5%), IAQ & Reduced Absenteeism: $632 B/yr
Health Care Savings Health Care Savings $75 B/yr $75 B/yr
Emission Reductions’ Market Value:Emission Reductions’ Market Value: $ 1.1 B/yr$ 1.1 B/yr
Total Total $795 Billion/yr. value $795 Billion/yr. value addedadded
* * 1. 1. Leonardo Academy / MTS Projections 2003, Surgeon General 2006 (certified Leonardo Academy / MTS Projections 2003, Surgeon General 2006 (certified bdgs).bdgs).
2. 2. Green retail buildings will also accrue increased retail sales. Green retail buildings will also accrue increased retail sales. 3. Excludes overwhelming benefits from avoided climate damages, & originator 3. Excludes overwhelming benefits from avoided climate damages, & originator
profits. profits. 4. Dollar benefits are $200B/yr. for UK, $200B/yr. for rest of Western Europe, $87B/yr.4. Dollar benefits are $200B/yr. for UK, $200B/yr. for rest of Western Europe, $87B/yr. for Canada & $80B/yr. for Australia. MBS is $4 trillion global industry (SEC 2003). for Canada & $80B/yr. for Australia. MBS is $4 trillion global industry (SEC 2003).
Capital Markets Partnership Copyright 2008
Capital Markets Partnership
Capital Markets Partnership Copyright 2008
Before it’s too late
Capital Markets Partnership
Capital Markets Partnership Copyright 2008
US Conference of Mayors Support ResolutionJune 2008
Capital Markets Partnership Copyright 2008
UK – Stern Review – Nov ‘06
• Report analyzes economic global impacts of climate change– “Business as Usual” vs. global innovation and market-based intervention
– QUOTE: “Climate change…greatest and widest ranging market failure ever seen…”
• Relates costs/risks on economic, environmental, and social scales– Floods / Storms
– Agriculture Yields
– Fresh Water Access
– Disease
• Bush White House 2008 Climate Report Concurs with these Impacts
– Mass Human and Species Migration
– Species Extinction
– Heat Waves / Cooling / Doughts
PROJECTED GLOBAL WARMING ECONOMIC IMPACT - Up to 20% of Global GDP
Capital Markets Partnership Copyright 2008
ElectricityTransportation
Heating
Allocation of 6.2 GtC/yr
Electricity: 40%Fuels used directly: 60%
Underwriting Standards & SBS Global Carbon Reduction in 5-10 yrs Enhances Energy Security & Stops Imminent
Irreversible Dangerous Climate ChangeFossil fuel use in 2000 (IEA) Allocation of 6.2 GtC/yr. (Princeton)
Buildings generate most of world’s climate pollution from electricity and heating. On average, certified buildings have 50% less conventional energy & climate pollution.
Capital Markets Partnership Copyright 2008
LEED EB CERTIFIEDLEED EB CERTIFIED
National Geographic National Geographic SocietySociety
Headquarters, Wash., Headquarters, Wash., DCDC
The Society added $16M in value from this LEED certification from a higher appraised value, raising tenant rents, lower operating costs, increased credit rating from Moody’s, & lower interest rates on large loans secured to the building. Presentation at 2003 Congressional Green Building Luncheon by Chris Liedel, CFO, National Geographic Society.
Capital Markets Partnership Copyright 2008
Multiple environmental, social & economic benefits over global supply chain. Economic benefits exceed green buildings.
Maximum Credit for Certified Products With:• 100% reduction of 1000 pollutants• 100% Green-e power use & conventional energy reduction• 100% postconsumer recycled content• 100% biobased organic content w/BMPs• 100% reuse/reclamation• Social equity requirements
300 manufacturer reps are educating their customers
SMaRT Sustainable Product StandardAdopted by Leading Fortune 500 Co’s, Fireman’s Fund, US Green Building Council’s LEED, & Underwriting Standards. Covers 80% of the world’s products.
Capital Markets Partnership
Capital Markets Partnership Copyright 2008
Capital Market Focus on “Green” Financially Tangible Asset Attributes
1. Energy efficiency & onsite green power
2. Water efficiency
3. Location aspects– Transit orientation– Pedestrian accessibility– Neighborhood amenities
4. Indoor environmental quality
5. Market positioning
6. Obsolescence risk– Bifurcated market – green vs. non-green (aka “brown”)
Capital Markets Partnership Copyright 2008
Green Building Underwriting Standards Principles
1. Easy entry / differentiate superior performance
2. Easy to analyze / simple to implement
3. Disciplined• Tangible financial impacts• Acknowledgement of intangible value
4. Utilize consensus standards / reduces risk
5. Third-party verified
6. Standard Unanimous Approval• Broad industry invitations and participation• Significant comments and amendments• ANSI consensus process
Capital Markets Partnership Copyright 2008
Structure – Green Building Underwriting Standards• Recognizes and incorporates existing industry
standards– Comprehensive– Transparent– Market-driven– Consensus-based
• Standards include– EPA EnergyStar– USGBC LEED Rating System– MTS Climate Neutral
• Performance based– Energy– Water– Indoor environmental quality
• Third-party verification requirement– Self-Regulation = No Regulation = Wild West
What is it? How does it work?
Capital Markets Partnership Copyright 2008
EPA ENERGY STAR – Overview
• Government-backed program helping businesses and individuals achieve superior energy efficiency
• Energy performance rating tools– ENERGY STAR Portfolio Manager (existing buildings)
– ENERGY STAR Target Finder (new construction)
• Scoring system of 1-100– Commercial buildings
• Bell curve based on statistically significant comparative data set• Higher score is better
– Median = 50– ENERGY STAR Certified buildings score 75 or higher
– Residential buildings• Based on energy consumption / HERS test• Lower score is better
Capital Markets Partnership Copyright 2008
USGBC’s LEED™ Rating SystemLeadership in Energy and Environmental Design
Environmental Responsibility Defined For Buildings • Answers question: “What exactly is an environmentally-responsible
building?”• Third party certification of environmental achievement
LEED Implementation • Point-based system• Broken into categories
Sustainable Sites 14 PointsWater Efficiency 5 PointsEnergy & Atmosphere 17 PointsMaterials & Resources 13 PointsIndoor Environmental Quality 15 PointsInnovation 5 PointsTOTAL POSSIBLE POINTS 69 Points
Certified 26-32 pointsSilver 33-38 pointsGold 39-51 pointsPlatinum52-69 points
Capital Markets Partnership Copyright 2008
Climate Neutral Certification
Consensus national standard
Certifies carbon neutrality
Certification process:• Audit baseline energy use
• Implement efficiency measures
• Address remaining energy use:
1. Install onsite renewable energy;
2. Purchase “Green-e” renewable energy;
3. Purchase/retire “Green-e” REC’s; and/or
4. Purchase annual emissions offsets based on the Cleaner and Greener® program requirements
• Certify by accredited 3rd party professional
Capital Markets Partnership Copyright 2008
Value Adjusted Score Ratio Score
ENERGYSTAR Score 40% Green Building Underwriting Standard Score 35%
LEED Rating NONE 0%
(intangible value) CERTIFIED 2% SILVER 5% GOLD 10% PLATINUM 15%
Climate Neutral Certified YES 10% NO 0%
CMP GREEN SCORE 100%
Implementation Example Capital Markets Partnership GreenValue Score Formula
Energy Star Score = 75
LEED Silver Certified
Near Mass-Transit
Energy / Water LEED Credits
Various IEQ LEED Credits 75
68
30
24
5
0
59
CMP
GREENSCORE = 59
Capital Markets Partnership Copyright 2008
Value Adjusted
Score Ratio Score ENERGYSTAR Score 80 40% 32
Climate Neutral Certified YES 10% 10
NO 0%
LEED RATING NONE 0% CERTIFIED 2% SILVER 5% GOLD 10% 10 PLATINUM 15% Green Building Underwriting Standard Score 74 35% 26
CMP GREEN SCORE 100% 78
Example Capital Markets Partnership Commercial GreenValue Score Application• LEED Gold certified office building• EnergyStar score = 80• Green Building Underwriting Standard score = 74 • Climate Neutral certified
= 78CMP
GREENSCORE
Capital Markets Partnership Copyright 2008
Why This MattersRisk Management / Transparency
Real Estate Value
1. Cash Flow
2. Timing of Cash Flow
3. Risk of Receiving Cash Flow
Capital Markets Partnership Copyright 2008
Risk Management • Lower operating expenses
– Energy / water price volatility– Energy / water efficiency and conservation– Energy – peak load demand– Insurance– Waste disposal– Maintenance– Capital expenditures
• Commercial - Evolving corporate green policies– Impact on tenant demand
• Potential for two-tiered market • Obsolescence risk
– Improved tenant satisfaction / retention
• Future regulatory compliance
• CO2 trading– Cost increases based on CO2 / ton used to power asset– Value capture
• Current / future tax incentives
• Building health / IAQ liability
• Informs investment consideration, capital access and pricing
Real Estate Value
1. Cash Flow
2. Timing of Cash Flow
3. Risk of Receiving Cash Flow
Capital Markets Partnership Copyright 2008
Why This MattersRisk Management / Transparency
• Lower operating expenses– Energy / water – price volatility– Energy / water – efficiency and conservation– Energy – peak load demand– Insurance– Waste disposal– Maintenance– Capital expenditures
• Evolving investor green policies / preferences– Impact on investor demand
• Potential for two-tiered market • Obsolescence risk
– Improved tenant satisfaction / retention
• Future regulatory compliance
• CO2 trading– Cost increases based on CO2 / ton used to power asset– Value capture
• Current / future tax incentives
• Building health / IAQ liability
CMP Green Value Score is a simple yet comprehensive tool informing:
• Relative investment risk• Prediction of investment performance
Leads to capital access opportunities/constraints and may affect capital pricing
Real Estate Value
1. Cash Flow
2. Timing of Cash Flow
3. Risk of Receiving Cash Flow
Capital Markets Partnership Copyright 2008
Applicability – CMP GreenValue Score
Reporting
Portfolio Management
Lending
Asset Management
Appraisal
Finance Decision
Tool
Reporting Tool (Optional)
Capital Markets Partnership Copyright 2008
Applicability – CMP GreenValue Score
Reporting
Portfolio Management
Lending
Asset Management
Appraisal
Finance Decision
ToolLeasing / Market PositionTI’s – Value FocusCapital Budgeting
Capital Markets Partnership Copyright 2008
Applicability – CMP GreenValue Score
Reporting
Portfolio Management
Lending
Asset Management
Appraisal
Finance Decision
ToolLeasing / Market PositionTI’s – Value FocusCapital Budgeting
Relative Value Indicator Focused Risk Analysis Obsolescence Signal
Capital Markets Partnership Copyright 2008
Applicability – CMP GreenValue Score
Reporting
Portfolio Management
Lending
Asset Management
Appraisal
Finance Decision
ToolLeasing / Market PositionTI’s – Value FocusCapital Budgeting
Relative Value Indicator Focused Risk Analysis Obsolescence Signal
Buy / Hold / SellCapital Raising
Capital Markets Partnership Copyright 2008
Applicability – CMP GreenValue Score
Reporting
Portfolio Management
Lending
Asset Management
Appraisal
Finance Decision
ToolLeasing / Market PositionTI’s – Value FocusCapital Budgeting
Relative Value Indicator Focused Risk Analysis Obsolescence Signal
Buy / Hold / SellCapital Raising
ConsultantsInvestorsAnalysts
Reporting Tool (Optional)
Capital Markets Partnership Copyright 2008
CMP GreenValue Score
Reporting
Portfolio Management
Lending
Asset Management
Appraisal
Finance Decision
ToolLeasing / Market PositionTI’s – Value FocusCapital Budgeting
Reporting Tool (Optional)
Relative Value Indicator Focused Risk Analysis Obsolescence Signal
Buy / Hold / SellCapital Raising
ConsultantsInvestorsAnalysts
Capital Markets Partnership Copyright 2008
PUBLIC
DEBT
EQUITY
PRIVATE
Financial Product Development Using the CMP GreenValue Score in Practice
Pension Investors• Commingled Funds• Separate Accounts
Syndicates
Capital Markets Partnership Copyright 2008
PUBLIC
DEBT
EQUITY
PRIVATE
Financial Product Development Using the CMP GreenValue Score in Practice
Pension Investors• Commingled Funds• Separate Accounts
Syndicates
Commercial BanksLife CompaniesSyndicated LoansFederal Home Loan Banks• Affordable Housing• Community Investment
Capital Markets Partnership Copyright 2008
PUBLIC
DEBT
EQUITY
PRIVATE
REIT Analysis
Real Estate Operating Co. Analysis
Financial Product Development Using the CMP GreenValue Score in Practice
Pension Investors• Commingled Funds• Separate Accounts
Syndicates
Commercial BanksLife CompaniesSyndicated LoansFederal Home Loan Banks• Affordable Housing• Community Investment
Capital Markets Partnership Copyright 2008
PUBLIC
DEBT
EQUITY
PRIVATE
REIT Analysis
REOC Analysis
Financial Product Development Using the CMP GreenValue Score in Practice
Pension Investors• Commingled Funds• Separate Accounts
Syndicates
“GOE” Securities• Fannie• Freddie
Securitizations (….if any)
Covered Bonds
Commercial BanksLife CompaniesSyndicated LoansFederal Home Loan Banks• Affordable Housing• Community Investment
Capital Markets Partnership Copyright 2008
PUBLIC
DEBT
EQUITY
PRIVATE
REIT Analysis
REOC Analysis
Financial Product Development Using the CMP GreenValue Score in Practice
Pension Investors• Commingled Funds• Separate Accounts
Syndicates
“GOE” Securities• Fannie• Freddie
Securitizations (….if any)
Covered Bonds
Commercial BanksLife CompaniesSyndicated LoansFederal Home Loan Banks• Affordable Housing• Community Investment
Capital Markets Partnership Copyright 2008
Investment Performance
• Increased cash flow– Revenue and expense side
• Debt Service Coverage Ratio• Loan-to-Value buffer
• Cap rate adjustments– Positive (at minimum neutral) / annual net operating
income / cost (or value) = Capitalization Rate
• Investor demand– Requires transparent
tracking/reporting– Capital attraction to risk reduction
Capital Markets Partnership Copyright 2008
MechanicsGreen Building Underwriting Standards
I. Information Disclosure1. Energy Star score of 1-100 (Portfolio Manager or Target Finder) 2. LEED certification and scorecard3. Climate Neutral certification4. Commissioning report (recommended)
II. Analyze LEED scorecard for specific LEED points achieved
Focus placed on a subset of specific LEED credits– Energy efficiency– Water use– Indoor environmental quality
III. Rate revenue/expense impacts of strategies employedRelative scale compared to a ‘market’ asset
-5 -4 -3 -2 -1 0 1 2 3 4 5
LOW MEDIUMMEDIUM HIGHHIGH
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Capital Markets Partnership Copyright 2008
Implement Full LEED Scorecard Analysis
SS-1 – Site Selection
SS-2 – Density/Connectivity
SS-4.1 – Public Transportation Access
WE-3.1/3.2 – Water Use Reduction
EA-1 – Energy Efficiency / ENERGYSTAR Score
EA-2 –On-Site Renewable Energy
EQ-1 – Outdoor Air Monitoring
EQ-2 – Ventilation Effectiveness
EQ-3.2 – IAQ Management Plan
EQ-4.1 – Adhesives / Sealants
EQ-4.2 – Paints and Coatings
EQ-4.4 – Composite Wood / Agrifiber
EQ-5 – Indoor Chemical / Pollutants
EQ-8.1/8.2 – Daylight / Views
FEATURE – Green Roof
FEATURE – Under Floor Air Distribution
INNOVATION – Integrated Design
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These LEED points are linked when performing an assessment of value
Income Analysis Summary
(Note: Up to 10 LEED Points)
-5 -4 -3 -2 -1 0 1 2 3 4 5
LOW MEDIUMMEDIUM HIGHHIGH
SS-6.1 – Stormwater
SS-7.2 – Heat Island Effect
WE-1.1/1.2 – Water Efficient Landscaping
EA-Prerequisite – Commissioning
WE-3.1/3.2 – Water Use Reduction
EA-1 – Energy Efficiency / ENERGYSTAR Score
EA-2 –On-Site Renewable Energy
EA-3 – Enhanced Commissioning
EA-5 – Measurement and Verification
MR-Prerequisite – Recycling
FEATURE – Green Roof
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(Note: Up to 10 LEED-NC Points)
EXPENSE Analysis Summary Note: DO NOT DOUBLE COUNTTHESE AREAS
Capital Markets Partnership Copyright 2008
Compile Score – Straightforward Analysis
Capital Markets Partnership Copyright 2008
Summary – Green Underwriting Standards
• Incorporate performance-based tangible attributes– Energy use /efficiency – Water use / efficiency– Location attributes– Indoor environmental quality
• Simple due diligence requirements– ENERGY STAR score– LEED scorecard– Climate Neutral Certification– Commissioning report
• Straightforward implementation
• Transparent & Consensus
• Third-party verified
Capital Markets Partnership Copyright 2008
Summary – GreenValue Score
• Incorporates performance-based tangible attributes– Energy– Water– Location– Indoor environmental quality
• Simple due diligence requirements– ENERGY STAR score– LEED scorecard– Climate Neutral Certification– Commissioning report
• Straightforward implementation
• Transparent
Capital Markets Partnership Copyright 2008
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7
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97
Sep-9
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NYMEX Light Sweet Crude
Crude Oil – Actual (Jan 1997 thru September 24, 2008)
World oil production flat since 2004 / China and India’s consumption surging / domestic consumption in oil producing countries increasing
Energy traders / OPEC publicly refer to the ‘proper’ price of $85 / barrel at which point OPEC reduces production to support prices
Capital Markets Partnership Copyright 2008
US Electricity Prices (1982 – 2006)
Source: US Department of Energy http://www.eia.doe.gov/fuelelectric.html
0.0
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4.0
6.0
8.0
10.0
12.0
Average Retail Price of Electricity, Residential Average Retail Price of Electricity, Commercial
Average Retail Price of Electricity, Industrial Average Retail Price of Electricity, Total
₵ / kwh
Capital Markets Partnership Copyright 2008
US Electric Power Generation Sources (2007)
49.8%
0.4%17.9%
3.0%
19.9%
2.3%6.5% 0.2%
Coal Other Gasses Natural Gas Petroleum Nuclear Solar / Wind Hydroelectric Other
Coal
Nuclear
Natural Gas
HydroSolar / Wind
Petroleum
Capital Markets Partnership Copyright 2008
DOE Coal Prices June 2003 to July 2006
Source: http://www.eia.doe.gov/cneaf/coal/page/coalnews/coalmar.html
CentralAppalachia+88%
Northern Appalachia+41%
Illinois Basin38%
Uinta Basin114%
Powder River Basin100%
Capital Markets Partnership Copyright 2008
DOE Coal Prices June 2003 to July 2008
July Price = $149 / ton
July Price = $140 / ton
Source: http://www.eia.doe.gov/cneaf/coal/page/coalnews/coalmar.html
+312% - Central Appalachia
+452% - Northern Appalachia
+200% - Illinois Basin
+254% - Uinta Basin
+127% - Powder River Basin
Capital Markets Partnership Copyright 2008
Capital Markets Partnership Copyright 2008
Natural Gas Spot Prices (Oct ’83 – Apr ‘08)
http://www.eia.doe.gov/oil_gas/natural_gas/info_glance/natural_gas.html
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Date
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1984
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985
Sep-1
985
May-
1986
Jan-1
987
Sep-1
987
May-
1988
Jan-1
989
Sep-1
989
May-
1990
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991
Sep-1
991
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993
Sep-1
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Jan-1
995
Sep-1
995
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1996
Jan-1
997
Sep-1
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May-
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Jan-1
999
Sep-1
999
May-
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Jan-2
001
Sep-2
001
May-
2002
Jan-2
003
Sep-2
003
May-
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Jan-2
005
Sep-2
005
May-
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Jan-2
007
Sep-2
007
Wellhead City Gate Residential Commercial
Capital Markets Partnership Copyright 2008
Conventional Energy Costs Expected to Continue Increasing at 20% / yr. for 10 yrs.
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4.00
6.00
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Avg. Inflation @ 3% (Myopic) 5% / Year 8% / Year 10% / Year 15% / Year Simmons Scenario (22% / year)
BOMA '04 Avg$1.83 / SF
'05 Increase of 40%
2x
3x
4x
5x
10x
Only Scenario Based on Actual Data Concerning Global
Depletion of Oil and Natural Gas Resources
Capital Markets Partnership Copyright 2008
Energy Market Drivers
1990
MarketRestructuring
Aging Power Grid
Globalization Digital Economy
Emissions andClimate Change
Energy Reliability andSecurity
ResourceScarcity
1995 2000 2005-10 2010-20
Capital Markets Partnership Copyright 2008
1511 Wisconsin Avenue NW #200
Washington, DC 20007