"Kyoto Effect" widens in Q2 2005

New Energy Finance's GEIX finished Q2 2005 at 1106.9, up 10.7% since the beginning of the year. The "Kyoto Effect", which saw constituents quoted in countries ratifying Kyoto surge 35.2% ahead of those quoted in non-Kyoto countries during Q1, continued in Q2, with the gap widening by 8.1%.

New Energy Finance's Global Energy Innovation Index (GEIX) finished Q2 2005 at 1106.9, up 10.7% since the beginning of the year. The "Kyoto Effect", which saw the value of clean energy companies quoted in countries ratifying the Kyoto Protocol surge 35.2% ahead of those quoted in the USA and Australia during Q1, continued in Q2 2005, with the gap widening by a further 8.1%.

The 21 constituent companies of the GEIX quoted in countries that signed the Kyoto Protocol were up by an average of 14.1% during Q2 2005. By contrast, the 29 GEIX constituents quoted in the USA and Australia, which did not sign the Kyoto Protocol, were up by only 6.0%. This is on top of the 35% performance gap during Q1 2005.

The GEIX tracks the performance of the largest 50 pure-play quoted renewable and low-carbon energy technology companies worldwide. It was launched at the start of 2005. Other highlights from the GEIX's performance over Q2 2005 are as follows:

· Overall, the GEIX rose 10.4% during the quarter. In the same period, by comparison, the NASDAQ was up 5.3% and the Amex Oil Index was up 12.3% on the back of high oil prices.

· Performance of GEIX constituents quoted on stock markets in Kyoto signatory countries was as follows: Frankfurt (seven companies) +29.2%; Copenhagen (one company) +23.5%; Madrid (one company) +9.7%; Tokyo (two companies) +3.9%;Toronto (four companies) -3.7%; AIM (six companies) -14.3%. Weighted average +14.1%

· Performance of GEIX constituents quoted on stock markets in non-Kyoto signatory countries performed as follows: Australian Stock exchange (four companies) +9.0%; Nasdaq (24 companies) +6.2%; NYSE (two companies) +4.2%; AMEX (one company) -8.1%. Weighted average +6.0%.

· Best-performing sector was Solar (eight companies in the GEIX) with average increase of +23.5%, bringing that sector's increase during the first half of 2005 to a total of 64.3%. Wind (four companies) was up 15.0% during the quarter and Efficiency Breakthrough (11 companies) was up 12.9%. Hydrogen and Fuel Cells (10 companies) was up just 1.6%.

· Poorest performing sectors were Power Storage (seven companies) with a drop of 6.5%, and Biofuels, Biomass and Waste (5 companies) with a drop of 4.5%.

· IPOs of clean energy companies worldwide during the quarter included: Polish Energy Partners (Distributed Generation, Warsaw); Australian Renewable Fuels (Biofuels, ASX); AgCert International (Carbon Trading, LSE); Trading Emissions (Carbon Trading, AIM); Renewable Energy Generation (Wind, AIM); Novera Energy (Biomass, AIM); Renova Energy (Biofuels, AIM); and Metal Tech (Fuel Cells, AIM). Another Polyfuel (Fuel Cells, AIM) went public just after the end of the quarter.

"After Q1 2005 it was too early to tell whether the "Kyoto Effect" was a one-off, or whether it marked a sustained divergence in the value of new energy stocks in Kyoto and non-Kyoto countries. With the gap continuing to widen to 46%, it must be of concern to investors in clean energy in the USA," said Michael Liebreich, CEO and founder of New Energy Finance.

For further information, contact Michael Liebreich on +44 20 7727 8590 or email him on michael@newenergyfinance.com.

About New Energy Finance

New Energy Finance is a specialist provider of news, data and analysis to investors in renewable energy and energy technology sectors worldwide. The company is based in London and is headed up by Michael Liebreich. The New Energy Finance Briefing, which is published every two weeks, contains a summary of all the news from the industry as well as features, analyses and an update of the Global Energy Innovation Index (GEIX). The New Energy Finance Desktop is the industry's premier source of financial information, containing a full news archive, details of nearly 8000 organisations, 4000 individuals and 2500 investments, all updated in real time. New Energy finance covers all types of investment activity, including venture capital, public markets, M&A and project finance, and all types of renewable and low-carbon energy technologies.

About Michael Liebreich

Michael Liebreich is founder and CEO of New Energy Finance. He is a serial entrepreneur, having founded, funded or helped build more than 25 media technology and business services. He has worked as a venture capitalist with Group Arnault, was Deputy Managing Director of Associated Press Television and Director of Sports News Television and Interactive Investor. Michael has a Masters of Arts in Engineering with First Class Honours from Cambridge University, and an MBA from Harvard Graduate School of Business, where he was a Baker Scholar and Harkness Fellow. His interest in energy goes back to his undergraduate years, when he won the Cambridge University Ricardo Prize for Thermodynamics. Michael speaks fluent German and French, and good Spanish. He represented Britain in the 1992 Albertville Olympics in skiing.

About the GEIX

The GEIX is designed as a currency-neutral way of summarising the performance of quoted companies in renewable energy and energy technology. It is based on the market performance of the 50 largest companies quoted around the world which derive at least half of their market value from activities in sectors covered by New Energy Finance. For definitions of the sectors, see http://www.newenergyfinance.com/NEF/HTML/Sectors.html. The GEIX contains companies in seven countries, quoted on ten different stock markets. Companies quoted only on over-the-counter markets are excluded. The aggregate market capitalisation of the companies in the index on 1 January 2005 was USD 14.6 billion. At the start of Q3 2005 it is USD 20.7 billion. Weighting is based on market capitalisation on that date, with no cap. No attempt is made to balance the GEIX's exposure to different markets, currencies or sectors. The GEIX does not represent the returns available to any particular investor due to currency fluctuations, available float, dividend policies and other factors. It is calculated on the basis of movements in the total market capitalisation of each company from the beginning of the reference period in the currency of the main market on which it is quoted. Share prices, numbers of shares and information about rights issues, exercise of warrants etc are taken from the main market on which each company is quoted and where a company is quoted on multiple markets, the share price used is that from the market we judge as offering most liquidity. No adjustment is made for management or other options outstanding. The value of the GEIX was set at 1000 on 1 January 2005. New Energy Finance relies on publicly available information on constituent companies which it selects and manipulates with resonable care. New Energy Finance does not guarantee that calculation of the GEIX does not contain errors and accepts no liability for investment decisions taken as a result of the information provided.

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