CLIMATE CHANGE - OPINION PIECE FOR INVESTMENT NOW MAGAZINE - by Mark Woodall of Climate Change Capital and Hugh Parnell of the Great Eastern Investment Investment Forum - February 05

CLIMATE CHANGE INVESTMENT OPPORTUNITIES

Climate change as an area of scientific study has passed beyond the debate of whether it is happening to 'what we are going to do about it?'. This transition has led governments to develop various incentives to encourage private sector investment that will result in reduced carbon emissions - as a result, as noted by Margaret Beckett MP, "climate change is now rightly a much-talked about subject in the business community". The creation of a market will allow the United Kingdom to maximise the use of its unique intellectual property in this sector, setting the stage for the UK government and companies to help build global markets for clean technology.

One example of the growing recognition of this expanding global market - currently growing at c.30% p.a. and forecast to reach £200bn by 2010 - is the interest demonstrated by investors such as the business angel members of the Great Eastern Investment Forum (GEIF), who recently gathered at a breakfast briefing to discuss the business opportunities presented by climate change and the policies developed to combat it.

Climate Change Capital (CCC), which worked alongside GEIF to hold the briefing, believes the key priority for business is to create a supportive investment environment where companies can rely on consistent government policy and to find early stage investors who understand the challenges new companies face. Groups of investors like those in the GEIF, one of the leading UK business angel networks, can help these companies get through these early challenges, and CCC is uniquely placed to help explain market risks to potential investors thus creating the right investment environment.

Interestingly, GEIF has noted a significant increase in the number of companies applying from this sector. The sheer breadth of possible technologies, services and solutions applying run the gamut from the design of new gearboxes for wind turbines, to new methods for power transmission, to the creation of environmental performance management systems, and to wastewater treatment technologies, offering investors the opportunity to find an area that interests them and to make a difference while making money.

Some of the companies approaching both GEIF and CCC have the potential to be world leaders in their fields, however, as with all early-stage companies, the challenge to the entrepreneurs creating businesses in this sector will be not only to devise ground-breaking, disruptive, scalable technologies, but to create the business processes and manage the growth and investment requirements built around the core business in order to exploit its full potential.

The United Kingdom's chief scientist, Sir David King, contends that the reality of climate change will have more of an impact on society than, and this does sound dramatic, the knock-on effects of the 'global war on terror'. We believe this challenge will offer significant opportunities for businesses and their investors. As consumers we probably all admit that we are inherently lazy, and changing our consumption habits will be a laborious process. Businesses and their investors can respond to this situation by creating, supporting and investing into pioneering, environmental technologies. The rewards, in every sense, could be astonishing.

Ends

Notes for editors - For further information, please contact Andrea Blakesley, Great Eastern Investment Forum Tel: 01223 720 213

Mark Woodall - Mark has nearly 20 years' business experience working with technology, energy and environmental companies, as a founder, adviser and investor. Mark is currently the Managing Partner and Head of Financial Advisory at Climate Change Capital, a boutique merchant-banking group which he co-founded in 2003. Climate Change Capital is focused entirely on companies and financial institutions affected by the regulatory and capital market responses to climate change and energy security of supply. In 2000, he co-founded iGabriel, an angel investment company that primarily invested in UK-founded software companies at the seed stage; iGabriel was merged with Pi Capital in 2002. Until March 2000, Mark was the Executive Director of Impax Capital Corporation, a niche investment bank focused on environmental technologies, which he founded in 1993. Whilst at Impax Capital, Mark was responsible for the financial advisory services of the firm and led and completed over a dozen transactions in renewable energy projects and technologies with a total capital requirement in excess of $350 million. Mark has an MBA from the Cranfield School of Management (Dean's List) and was an Officer in the British Army.

Background Information on Climate Change Capital - Climate Change Capital was formed in May 2002 in the belief that there was a need for a specialist financial adviser in new markets that were being created by fundamental changes in energy and environmental policy."

The Climate Change Capital Group ("CCC") provides financial services and products to organisations affected by climate change policy as well as adaptation to, and the physical consequences of, climate change and the responses to energy security of supply. The CCC value proposition is that superior policy and market knowledge leads to superior investment decisions in markets created by government policy. Therefore, the Group has, at its heart, a core competence of markets and policy research in the areas of climate change, environment and energy. This manifests itself into a clear understanding of the associated markets of Clean Power, Clean Fuels, Clean Technology and Carbon Finance with regard to their economics and technologies. The Group, through its subsidiaries, either currently provides or intends to provide, corporate and project finance advisory services, market making and trading of environmental commodities and asset management and investment advisory services for its clients in these four markets.

The CCC Group is a UK-based integrated specialist financial products and services firm, focused on EU markets but with a global perspective. The Group serves four types of client: (1) Financial Institutions; (2) Energy Intensive Companies; (3) Solution Providers; and (4) Governments/NGOs.

Financial Institutions, which comprise venture capital and private equity firms, as well as commercial and investment banks, insurance companies, pension funds and hedge funds, require specialist knowledge when considering any investment activity in companies in the Group's four target markets due to the complexity of policies, technologies and carbon pricing. Energy Intensive Companies, which include electricity generation and supply companies, oil and gas producers as well as companies in the cement, glass, steel, and pulp & paper sectors, need to have a thorough understanding of how to maximise competitiveness within a carbon-constrained economy. Solution Providers, which are either independent entrepreneurial companies or divisions within larger more established firms, provide the technologies or projects which enable the transition to a low-carbon economy. Their primary need is access to capital to implement their plans. Finally, Government departments, whether at the local, national or international level, together with related NGOs and trade associations need specialist advice on the manner in which policy and market mechanisms/responses can be combined to achieve their stated goals.

Due to the international nature of many of the policies and impacts related to climate change, CCC is focused on the EU markets and within the EU it has placed special emphasis on the UK, Germany, Iberia, Italy and parts of Scandinavia due to their economic size as well as their position on the implementation of national and international energy and carbon policies. For more information go to www.climatechangecapital.com

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