Further update on Carbon Arbitrations

Trading Emissions PLC

14 September 2015

Trading Emissions PLC

Further Update on Carbon Arbitrations

Trading Emissions PLC (the "Company" or "TEP") announces that it has today been informed of the award made by the arbitration tribunal in respect of two claims amounting to approximately €6 million lodged by subsidiaries of Yunnan Dianneng (Group) Holding Co. Ltd ("Dianneng").

This announcement should be read in conjunction with the announcement made by the Company on 4 September 2015.

Arbitration Award

The arbitration tribunal found in favour of TEP and dismissed both claims in their entirety.

The tribunal also directed the Dianneng subsidiaries to pay TEP US$931,440 for its legal fees and costs incurred for the proceedings, within 60 days of issuance of the award.

The tribunal was comprised of three eminent and respected arbitrators with substantial experience in determining complex disputes in a judicial and/ or arbitral capacity.

The decision of the tribunal is final and the arbitration award is binding. There are very limited rights of appeal.

Hong Kong arbitration awards are enforceable in China in accordance with the "Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong Special Administrative Region". This Arrangement provides for the enforcement of Hong Kong arbitration awards in the Chinese courts, without re-opening the merits of the underlying disputes. Possible challenges to such enforcement are limited.

Background

In March and June 2014, the Company received notices of arbitration challenging the amendments that had been made to, in total, six Emissions Reduction Purchase Agreements ("ERPAs"), each between TEP and a project company owned by Dianneng.

Each claimant is a special purpose company, which operates a hydro-power project in Yunnan province, and is counterparty to an ERPA with TEP. These companies are subsidiaries of Dianneng, which is ultimately controlled by the China Power Investment Group ("CPI"), one of China's largest energy companies. A subsidiary of CPI is listed on the Stock Exchange of Hong Kong.

The associated claims originally amounted to, in aggregate, approximately €24 million, but were since revised by Dianneng to an aggregate of approximately €26 million. These figures do not include costs incurred as a result of the claims, which will usually be paid, at least in part, by the losing party to the winning party.

Awards have now been issued in the Company's favour in respect of three claims, amounting to approximately €15 million.

The arbitration processes in respect of the remaining three claims, amounting to approximately €11 million, have been deferred by mutual agreement between Dianneng and TEP.

Each of the disputes is subject to arbitration proceedings in Hong Kong under Hong Kong law. TEP continues to believe that the basis of all of the claims is spurious and misconceived and that the quantum of the claims is in any event incorrect.

Each of the claims lodged by Dianneng's subsidiaries is based on substantially similar ERPA contractual terms and arguments. However, Dianneng's manipulation of the rules applicable to arbitrations in Hong Kong resulted in the Hong Kong International Arbitration Centre appointing different sole arbitrators to preside over each of four of the claims (including the single largest claim, decided on 4 September 2015, and the three remaining claims). This has resulted in an inefficient and unnecessarily expensive resolution process for these disputes, with the inherent risk that the tribunals might render inconsistent decisions.

Enquiries:

FIM Capital Limited +44 (0)1624 681250

(formerly IOMA Fund and Investment Management Limited)

Liberum Capital Limited +44 (0)20 3100 2222

(Steve Pearce/ Tom Fyson/ Josh Hughes)