ICF Consulting Releases NO_x Allowance Market Outlook 2000

Study Concludes Current NO_x Allowance Prices Will Rise

FAIRFAX, VA, February 28, 2000 - A new study predicting higher NO_x allowance prices in Northeastern states' Ozone Transport Region (OTR) has just been released. Prepared by ICF Consulting, the study, NO_x Allowance Market Outlook 2000, predicts that NO_x allowance prices in Northeastern states—currently as low as $1,000 per ton—are not sustainable beyond 2002. The study indicates that in the short term, NO_x prices will remain near current levels because of the large amount of control measures in place (existing and planned) to reduce NO_x emissions. These controls will continue to depress the demand for NO_x allowances through 2002. Thereafter, NO_x allowance prices will rise, according to ICF Consulting, dependent upon the regulatory regime put in place.

The NO_x Allowance Market Outlook study examines the engineering and economic fundamentals that will drive the NO_x allowance market in the future. The study also explores the relationship between the current OTR NO_x market and alternative future NO_x regulations, including the current New Source Review debate.

"In our last NO_x Outlook, published in November 1998," said John Blaney, Senior Vice President of ICF Consulting, "we challenged conventional wisdom, asserting that allowances were significantly overvalued. Given current market conditions, it is clear that our assessment was accurate. Our current analysis indicates that the market has overcompensated and that long-term prices are artificially low."

Optimizing Compliance Decisions in the Face of Regulatory Uncertainty

ICF Consulting's NO_x Allowance Market Outlook also sheds light on the significant regulatory uncertainty now facing compliance planners in the Northeast, Midwest, and Southeast. The study goes beyond simple sensitivity analysis, providing an in-depth assessment of upcoming air regulatory developments.

"The greatest challenge facing compliance planners today," said Blaney, "is to determine which emission control investments make economic sense in the face of tremendous air regulatory uncertainty. Our NO_x Outlook shows that the economics of many compliance decisions are robust across a broad range of alternate air regulatory scenarios. We believe that an integrated analysis of the dynamic electric, fuel, and emission market impacts of existing and potential regulations is the only way to evaluate air compliance decisions."

Impacts of Regulatory Uncertainty Analyzed

The NOx Allowance Market Outlook offers ICF Consulting's views and insights on allowance prices and markets through the year 2015. The study includes price forecasts and compliance decisions under a variety of alternate potential NO_xregulatory scenarios:

• Assessment of potential Section 126 (Clean Air Act) and SIP Call (EPA's call for revisions to state implementation plans) NO_x regulations. Those regulations are two variants of a broader NO_x trading system that would extend the existing Northeastern program to cover Midwestern and Southeastern states.
  
  
• Evaluation of recent and near-term NO_x market trends that include price trends of allowances during the first year of the OTR; ICF Consulting's year 2000 ozone season forecast; detailed analysis of issues such as the triggering of progressive flow control and the resulting impact on prices.
  
  
• Assessment of the impacts of timing, scope, and stringency of future NO_x regulations, as well as interactions between regional NO_x trading regimes.
  
  
• Sensitivity forecasts based on potential air regulations to control the emissions of fine particulates and carbon; analysis of their effects on the variance of future NO_x allowance prices.

ICF International (Nasdaq: ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, environment, transportation, social programs, defense, and homeland security markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 1,800 employees serve these clients worldwide. ICF’s Web site is http://www.icfi.com.

For Immediate Release Contact: Douglas Beck 1.703.934.3820