Monthly Bulletin

<%@LANGUAGE="VBSCRIPT" CODEPAGE="1252"%> Monthly Bulletin

SO2 EA and NOx EA
May 2004

May 2004 SO2 EA and NOx EA MPI HEADLINES
SO2 EA MPI Up 28.50% - Vintage 2004 NOx EA MPI Up 13.29%

What are the Cantor Environmental Brokerage SO2 EA and NOx EA MPIs?

The Cantor Environmental Brokerage Market Price Indices (MPIs) are prices that reflect current market conditions for Clean Air Act Title IV SO2, and Section 126/NOx SIP Call emission allowances (EAs). The MPI is an average of the following three numbers (where available) (Note: fees and commissions are not.

RECENT TRANSACTION PRICE
Prices from the most recent transactions (sales, swaps, and options) either executed by Cantor Environmental Brokerage and/or reasonably believed by Cantor Environmental Brokerage to have occurred. Also note that the MPI does not include transactions that are reported as retirements or facility changes of ownership because such transactions may not be reflective of current market conditions.

Lowest Offer Price
Lowest price, reported to Cantor Environmental Brokerage, at which a seller is willing to sell.

Highest Bid Price
Highest price, reported to Cantor Environmental Brokerage, at which a buyer is willing to buy.

If you would like to receive this bulletin as an e-mail attachment in Adobe format please fax this to 203-662-3643 with your e-mail address listed below, or send an email to apaton@cantor.com.

Don’t want to get this anymore? No problem! Tell us by checking the box below and faxing this back to 203-662-3643:

[ ] Stop sending this to me.
Give us your name, company, and fax number:

For More Information Call (203) 662-3638
19 Old Kings Highway South, Darien, Connecticut 06820
Fax (203) 662-3643

www.emissionstrading.com

Note: All information contained here is obtained by Cantor Environmental Brokerage from sources believed to be accurate and reliable. However, because of the possibility of human and mechanical errors, as well as other factors, such information is provided "as is" without warranty of any kind and Cantor Environmental Brokerage, in particular, makes no representation or warranty as to the accuracy, timeliness, or completeness of this information. Under no circumstance shall Cantor Environmental Brokerage have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to any error (negligent or otherwise) or other circumstance involved in procuring, collecting, compiling interpreting, analyzing, editing, transcribing, transmitting, communicating, or delivering any such information, or (b) any direct, indirect, special, consequential, or incidental damages whatsoever even if Cantor Environmental Brokerage is advised in advance of the possibility of such damages, resulting from the use of, or inability to use, any such information. The data and information contained herein are, and must be construed solely as statements of opinions and not statements of fact or recommendations to purchase, sell, or hold SO2 or NOx EAs. All prices are merely indications of interest, do not represent firm bids and offers, and their terms are subject to change without notice. NOWARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH DATA OR INFORMATION OROTHER OPINION IS GIVEN OR MADE BY CANTOR ENVIRONMENTAL BROKERAGE IN ANY FORM OR MANNER.

For information on trading SCAQMD RTCs and/or ERCs, SJVAPCD and BAAQMD ERCs, Illinois ATUs, ERCs, DERs, or Sewerage Facilities Charge Credits please visit or call 1-800-228-2955 ext. 1, 2, 4, 6, 7, 8, or 9. For information on trading HGA NOx Allowances, call 800-228-2955 ext. 13 or 14. For information on trading NOx Section 126/NOx SIP Call Allowances, and SO2 Allowances call (203) 662-3638 or 800-228-2955 ext. 6 or 12. For information regarding Greenhouse Gas Credits visit , or call 800-228-2955 ext. 10.

            May 2004
           CANTOR ENVIRONMENTAL BROKERAGE
           SO2 EA Market Price Index

Cantor Environmental BROKERAGE Market Price Index: $361.11
(Call 203-662-3638 for description)

	Bids*	Offers*	Trades	MPI
Price/Volume	2,500 @ $375.00	2,500 @ $385.00	Not Listed
Weighted Average	$375.00	$385.00	$323.33	$361.11

Immediate Settlement

		Best Prices ($/Allowance)		Maximum Volume
Term	Vintage	Bid to Buy	Offer to Sell	Bid	Offered
1 Year Term	2004	$375.00	$384.00	2,500	2,500	Allowances
	2005	$373.54		2,500		Allowances
	2006	$372.56		2,500		Allowances
	2007	$366.56		2,500		Allowances
	2008	$349.69		2,500		Allowances

Swaps


Swap Rates against vintage 2004 allowances
	2005	2006	2007	2008
Offer	0.39%	0.65%	2.25%	6.75%
Ratios for base years other than 2004 are available upon request.

SO2 EA Market Beat

  The Cantor Environmental Brokerage SO2 EA
  Market Price Index increased by 28.50% this
  month from $281.02 in April 2004
to $361.11 in May 2004.

            May 2004
           CANTOR ENVIRONMENTAL BROKERAGE
           NOx EA Market Price Index

BEST BIDS TO BUY			BEST OFFERS
2004	50 tons	$2,200/ton	2004	50 tons	$2,300/ton
2005	50 tons	$3,000/ton	2005	50 tons	$3,000/ton
2006	50 tons	$2,925/ton	2006	50 tons	$3,000/ton
2007	50 tons	$2,500/ton	2007	50 tons	$2,700/ton

RECENT TRADE PRICES April 27, 2004 - May 25, 2004
	V04 for $2,000/ton	V06 for $2,975/ton	V05 for $3,050/ton	V04 for $2,200/ton
	V04 for $2,050/ton x2	V08 for $2,500/ton	V05 for $3,075/ton	V07 for $2,675/ton
	V06 for $2,900/ton	V06 for $3,000/ton	V04 for $2,225/ton	V07 for $2,650/ton
	V04 for $2,075/ton	V06 for $2,925/ton	V04 for $2,250/ton	V06 for $3,000/ton x3
	V04 for $2,050/ton	V06 for $2,950/ton x2	V03 for $1,900/ton	V07 for $2,650/ton
	V06 for $2,950/ton x3	V04 for $2,150/ton	V06 for $2,950/ton	V04 for $2,225/ton x2
	V08/09 for $2,225/ton	V04-06 for $2,700/ton	V06 for $3,000/ton x5	V04 for $2,250/ton x2
	V06 for $2,850/ton	V04 for $2,175/ton x2	V04 for $2,275/ton
	V06 for $2,875/ton x2	V04 for $2,175/ton x2	V07 for $2,700/ton
	V04 for $2,150/ton x2	V04 for $2,200/tpy x2	V04 for $2,000/ton
	V05 for $2,950/ton	V06 for $2,950/ton x2	V06 for $2,975/ton
	V06 for $2,900/ton	V05 for $3,050/ton	V06 for $2,950/ton
	V04 for $2,175/ton x2	V06 for $3,000/ton	V04 for $2,250/ton
	V04 for $2,200/ton x2	V04 for $2,200/ton	V05 for $3,075/ton
	V06 for $2,950/ton x2	V07 for $2,700/ton	V06 for $2,925/ton

MARKET INDEX PRICE
	2004 $2,225/ton	$261
	2005 $3,072/ton	$239
	2006 $2,961/ton	$113
	2007 $2,642/ton

            May 2004
           CANTOR ENVIRONMENTAL BROKERAGE
           Market News

EPA Publishes Supplemental CAIR Proposal		Also suggested was a plan to States with a quantity of supplemental allowances to make up the difference. It was suggested that States would then be free to allocate these allowances as they see fit. EPA has also proposed regulatory text for a model multi-state cap and trade program for SO2 and NOx and is presently accepting comments to the proposal. A public hearing will be held on June 3, 2004 to hear oral testimony. Additional information may be obtained at www.epa.gov/interstateairquality/
On May 18, 2004, the U.S. Environmental Protection Agency published a Supplemental Proposal for the Clean Air Interstate Rule (CAIR). An interesting point to note is that under the original proposed rule, EPA required that from 2015 sources would retire allowances at a 3:1 ratio. Because retiring allowances at this ratio would have resulted in greater reductions than was required, EPA is soliciting comments on ways to address the differential. One suggestion put forward by EPA is that the ratio be changed to 2.86:1, however, this idea may result in some logistical problems for affected sources.

SO2 Future Prices Converge

EPA’s proposed CAIR includes provisions for discounting the value of SO2 in 2010 and 2015. The method by which the discounting will occur is in the use of allowances: a 2 for 1 allowance to emission ratio will be used from 2010 through 2014, while 2015 and later will see either a 3 for 1 or 2.86 for 1 ton-emitted ratio. The squeeze on allowances expected to be caused by CAIR, combined with the fact that 2009 and earlier vintage SO2 allowances would be permanently useable on a 1 for 1 basis, has added to the value of allowances up to Vintage 2009. Traders have recognized the potential for future value in the present-day allowances, especially if the CAIR is implemented.

For more information please call us at 800-228-2955.

Cantor Environmental Brokerage
19 Old Kings Highway South, Darien, Connecticut 06820
Tel. (203) 662-3638 Fax (203) 662-3643
www.emissiontrading.com

SO2 Sees Huge Rise

Prices have risen dramatically since last month. On April 26, 2004 (last month’s MPI date), spot traded last at $284; today’s close saw the last trade at $370. There are several converging factors contributing to the dramatic price change, including: a) increasing oil and natural gas costs, making coal a fuel of choice; b) greater-than-expected heat for this time of year c) unscheduled plant outages; d) concern over SO2 supply, as the bank continues to slowly decrease; e) Recent publications highlighting that SO2 control (scrubbing) costs exceed $600/ton; and f) CAIR, as proposed, will add value to present-vintage allowances at a later date (see, “SO2 Future Prices Converge” article on left).

To Reach Cantor Environmental Brokerage Staff Call 800-228-2955 or Dial Direct:
Josh Margolis San Francisco RTCs/ERCs/DERs 800-228-2955 ext 1	Robin Langdon San Francisco RTCs/ERCs/DERs 800-228-2955 ext 2
Andy Kruger Darien, CT ERCs/NOx & SO2 EAs/DERs 800-228-2955 ext 6	Alexa Paton Darien, CT ERCs/NOx & SO2 EAs/DERs 800-228-2955 ext 6
Laurie Gage New York ERCs/NOx & SO2 EAs/DERs 800-228-2955 ext 7	Lauren Kisling New York ERCs/NOx & SO2 EAs/DERs 800-228-2955 ext 7
Mike Hammond San Francisco RTCs/ERCs/DERs 800-228-2955 ext 9	Christine Grandstaff Los Angeles RTCs/ERCs/DERs 800-228-2955 ext 4
Diarmuid McGarry San Francisco Back Office Manager 800-228-2955 ext 3