The recent announcement of plans for a 1.2 million barrels per day (bbl/d) cut in oil production by the Organization of Petroleum Exporting Countries (OPEC) has not yet made much of an impact on world oil prices, as the market awaits evidence of substantial compliance. Recent spot prices for West Texas Intermediate (WTI) crude oil are the lowest since February 2005. Demand for petroleum should grow as the winter heating season ramps up. With some reduction in OPEC oil production, the price of WTI crude oil is projected to rise over the next several months. The price of WTI crude oil is projected to average around $66 per barrel in 2006 and $65 per barrel in 2007 (West Texas Intermediate Crude Oil Price).

Daily natural gas spot prices, which fell throughout September because of moderate temperatures and high inventories in underground storage, have risen sharply in recent weeks. This price movement was not unexpected once the heating season began. Henry Hub Natural Gas Spot Prices are projected to average $7.06 per mcf in 2006 and increase to an average of $7.79 per mcf in 2007.

Our forecast of winter heating fuel expenditures has not changed significantly from last month. Average household heating fuel expenditures are projected to be $928 this winter compared to $947 last winter. This is the first winter since the winter of 2001-02 in which home heating fuel expenditures are not expected to significantly increase over the prior winter.

The World Energy Outlook 2006 Maps Out a Cleaner, Cleverer and More Competitive Energy Future

07 November 2006 London --- "World political leaders have decided to act with resolution and urgency to change the energy future. The World Energy Outlook 2006 shows how to make that happen”, said Claude Mandil, Executive Director of the International Energy Agency (IEA) today in London at the launch of the latest edition of the Outlook – the annual flagship publication of the IEA.

“WEO-2006 reveals that the energy future we are facing today, based on projections of current trends, is dirty, insecure and expensive. But it also shows how new government policies can create an alternative energy future which is clean, clever and competitive – the challenge posed to the IEA by the G8 leaders and IEA ministers”, Mr. Mandil emphasised……

Nov. 7 (Bloomberg) -- Natural gas futures rose, erasing declines, amid speculation that inventories of the furnace fuel fell for a second straight week last week.

Gas supplies held in underground caverns may have dropped by 1 billion cubic feet last week, according to the median estimate from 10 analysts surveyed by Bloomberg. A drop this week may mean that utilities and gas storage companies are done adding to storage until next spring.

``You're not putting gas into'' storage, which is bullish for prices, said Carl Neill, an analyst at Risk Management Inc. in Chicago. ``Unless we have an inordinately warm November,'' then inventories won't rise again this year, he said.

LONDON (Reuters) - Oil eased but stayed in sight of $60 on Tuesday after leading OPEC producer Saudi Arabia held out the prospect of deeper output cuts to remove excess supply. Prices rose 88 cents on Monday after Saudi Oil Minister Ali al-Naimi said the Organization of the Petroleum Exporting Countries would take action when it meets on December 14 if world markets remained imbalanced.

U.S.

crude <CLc1> was off 11 cents at $59.91 a barrel by 1042 GMT. London Brent <LCOc1> was down 11 cents at $59.64.

Naimi, oil minister of the world's top exporter, noted "very high" stockpiles of fuel worldwide. Analysts echoed his view.

"The immediate oil inventory levels are not well balanced.

U.S.

supplies are ample," said Tony Nunan, a manager at Mitsubishi Corp.'s risk management unit.

Nov. 7 (Bloomberg) -- Natural gas demand will increase less rapidly than previously forecast because higher prices are making coal more popular for power generation, the International Energy Agency said.

Demand for gas will rise by 2 percent a year through 2030, down from 2.1 percent forecast last year and from growth of 2.6 percent growth experienced in 1980-2004, the Paris-based IEA said in its World Energy Outlook 2006 report. It raised the forecast for annual coal demand growth to 1.8 percent.

Electricity generation accounts for more than half the forecast increase in demand for natural gas to 2030. Oil and gas prices this year have been between three and four times higher than in 2002, said the agency, raising its forecasts for the fuels through 2030.

``Coal is now cheaper than natural gas for electricity generation,'' the IEA said in a statement accompanying the report. ``The realities of the energy market have become harsher and the relative competitive position of the fuels has changed.''

ABU DHABI:

Oman

is ready to abandon its retroactive oil export price mechanism and use the new Dubai Mercantile Exchange (DME) crude futures contract instead, the country’s oil minister said on Sunday.
Oil and Gas Minister Mohamed bin Hamad al-Rumhy said an agreement on the change could be reached within weeks, if certain guarantees are worked out.
His comments are the first public indication of the non-Opec producer’s willingness to set prices from the DME Oman crude contract, due for launch before year-end.
The switch, which traders said was necessary for the contract to thrive, would be a huge boost for the market and may change the way Middle East oil is priced.
“They want MOG (ministry of oil and gas) to stop retroactive pricing and DME to take over, and we have no problem with that, so the market decides the actual value,” Rumhy told reporters yesterday.
“That is the objective, if we get the assurances.”
He said the two sides needed to agree on safety factors in the event that things go wrong with the system, although he did not specify what kind of guarantees he hoped to secure.
The DME is a joint venture of Dubai and the New York Mercantile Exchange.

Oman

has publicly backed the contract in the past, but always said it would take a wait-and-see stance regarding its own system, which sets the price of its crude – based on market conditions – after the month’s exports have finished.
By switching to the DME,

Oman

would provide an incentive for trading on the exchange to the traders, refiners and producers who buy the more than 700,000 bpd of Omani crude based on the MOG price. Oman is one half of the benchmark for Middle East exports to Asia.
“It is a chicken-and-egg situation,” Rumhy said. “We want to ensure our interests are protected, and they cannot really move in earnest unless we join them. I think we will resolve the different opinions... We should resolve them in the next few weeks.”
Although past efforts to launch Middle East sour crude futures have fizzled, the support of the Omani government and the allowance for physical delivery of

Oman

crude against the contract will give the DME contract a leg up, traders said.
Many traders hope it will provide a more liquid, transparent benchmark for more than 12mn bpd of Middle East exports to Asia, now set by the published price of physical Dubai and

Oman

crudes in a small window of trade among about a dozen major players.
If the contract takes flight, it could eventually prompt conservative Middle East producers such as Saudi Arabia and

Kuwait

to switch their price benchmark away from published Oman/Dubai assessments and to the DME’s futures contract.
Most producers already use the main European and

crude oil futures contracts to price their Western exports. – Reuters

LONDON, Oct 28 (Reuters) - Ignoring climate change could lead to economic upheaval on the scale of the 1930s Depression, underlining the need for urgent action to combat global warming, a British report on the costs of climate change says.

Here are some key findings from the report, a 27-page summary of which was obtained by Reuters:
* On current trends, average global temperatures will rise by 2-3 degrees centigrade within the next 50 years or so.
* If emissions continue to grow, the earth could warm by several more degrees, with severe consequences that would hit poor countries most.
* Stabilising greenhouse gases in the atmosphere will cost about 1 percent of annual global output by 2050. If no action is taken, climate change will reduce global consumption per head by between five and 20 percent.
* The global power sector will have to be at least 60 percent, and perhaps as much as 75 percent, decarbonised by 2050 to stabilise greenhouse gases in the atmosphere.
* Markets for low-carbon energy products are likely to be worth at least $500 billion per year by 2050, and perhaps more.
* Worldwide incentives to encourage the use of new low-carbon technologies should be raised by two to five times from the current level of some $34 billion a year.
* Emissions from deforestation are estimated to represent more than 18 percent of global emissions, a share greater than is produced by the global transport sector.
* The poorest developing countries will be hit earliest and hardest by climate change. The international community has an obligation to support them in adapting to climate change.

More Information and the report can be found thru BBC’s coverage at their website:

United Nations Office at Nairobi, Gigiri: Kenya is hosting the second meeting of the Parties to the Kyoto Protocol (COP/MOP 2), in conjunction with the twelfth session of the Conference of the Parties to the Climate Change Convention (COP 12), in Nairobi from 6 to 17 November 2006.
Read more

United States

Reaffirms Opposition to Emissions Cap at Climate Change Conference

NAIROBI, Kenya — As delegates from more than 100 nations gathered for talks on the world's changing climate, many looked for signs the United States might ease its stand against mandatory reductions on global-warming emissions.

On the first day of the conference, they got their answer — it won't happen any time soon.

"I certainly got no indication (from the Bush administration) that there's any change in our position, nor is there likely to be during this presidency," U.S. negotiator Harlan Watson said.

Aligning Utility Interests with Energy Efficiency Objectives: A Review of Recent Efforts at Decoupling and Performance Initiatives http://aceee.org/pubs/u061.htm

Soaring fuel prices, growing concerns about utility system reliability needs, and increasing awareness of future environmental risks have all reinvigorated interest in the use of energy efficiency as a serious utility system resource. With this renewed interest, there is increasing recognition that in order to expect utilities to embrace the aggressive deployment of energy efficiency programs, something must be done to address the financial concerns utilities have regarding energy efficiency. As a result, a growing number of states are re-examining utility regulations and policies that affect utility planning, decision-making, and operations to ensure that such policies and regulations are supportive of energy efficiency objectives.

Electric utility industry experts have long recognized that under typical regulatory structures (e.g., traditional rate-of-return regulation, rate caps, etc.), utilities do not have an economic incentive to provide programs to help their customers be more energy-efficient. In fact, they typically have a disincentive because reduced energy sales reduce utility revenues and earnings. The financial incentives are very much tilted in favor of increased electricity sales and expanding supply-side systems.

This report examines recent experience with two key regulatory approaches to overcome these structural disincentives: (1) “decoupling” of utility revenues and profits through periodic “true-up” of actual to projected sales; and (2) providing shareholder “performance incentives” for achieving energy efficiency program objectives. These basic concepts are not new. In the 1980s and 1990s during the era of “integrated resource planning,” a number of states enacted such policies. However, the advent of the utility restructuring movement greatly diminished interest in such policies and regulations; most of them were dropped in the mid- to late 1990s. The growing need for energy efficiency as a resource to help meet utility system needs has renewed interest in these regulatory approaches. Our review of these recent experiences includes case studies of states or individual utilities where either decoupling or shareholder performance incentives have been enacted.

AUSTIN, Texas — Would you rather live next to a nuclear reactor or a coal-fired power plant?

Even as they favor energy conservation and investment in solar and wind power, the realities of a looming power crisis, the political landscape and concerns about global climate change have led some activists in Texas to reexamine long-time opposition to nuclear power. For at least 25 years, or since the partial meltdown at Three Mile Island in Pennsylvania in 1979, utilities have mothballed plans for new nuclear reactors. But with new federal money up for grabs, utilities have told the Nuclear Regulatory Commission they plan on building thirty reactors nationally, including at least seven in Texas. Currently there are only two nuclear sites in the state, near Bay City and Glen Rose.

The environmental issues are thrown into sharpest relief in Texas, where Gov. Rick Perry has pressed the state environmental commission to approve plans for 17 coal-fired power plants to meet growing energy needs. The plants would significantly increase carbon dioxide emissions that contribute to global climate change. Dallas-based TXU Corp. acknowledges their 11 proposed plants will alone add 78 million tons of CO2 to the atmosphere.

LONDON, Nov. 3, 2006 - Morgan Stanley says it plans to invest in approximately $3 billion of carbon/emissions credits, projects and other initiatives related to greenhouse gas (GHG) emissions reduction over the next five years.

The majority of this investment will represent increased commitments to purchase carbon credits from projects as the Firm's Commodities Trading Department expands its existing Carbon and Emissions platform. The remainder will constitute investments in projects and initiatives related to emissions reduction, such as those certified under the Clean Development Mechanism (CDM) and Joint Implementation (JI) initiatives. These projects allow developed countries to transfer and fund emissions-reducing technology in other signatory nations. The United Nations oversees the project registration and approval process.

"We strongly support the use of market-based solutions to meet environmental policies and objectives," said Simon Greenshields, Managing Director and Global Head of Power, associated Power Fuels and Carbon/Emissions Trading and Structuring at Morgan Stanley.

Organized by:

The Center for Economic and Environmental Partnership, Inc. (CEEP) In partnership with: THE ^OCLIMATE GROUP

Thanks to the many participants from across the country who participated in our October 13^th inaugural carbon call event. Event participants were provided an overview of the current states of climate science, markets and the policy initiatives of several US States. Event registrants can review these presentations and audio recordings on our website event archive.

This month we begin to build upon this foundational information with a review of The Carbon Disclosure Project and a presentation of the CDP4 Survey Report by lead author Doug Morrow from Innovest Strategic Value Advisors.

Michael C. Sanfilippo

Energy Consultant

Great Forest Inc.

p:(212) 779-4757

m:(917) 656-4985

f:(212) 779-8044

msanfilippo@greatforest.com

Aligning Utility Interests with Energy Efficiency Objectives: A Review of Recent Efforts at Decoupling and Performance Initiatives http://aceee.org/pubs/u061.htm

Organized by: