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                                                                                 ADVANCED ENERGY SOLUTIONS
GLOSSARY OF TERMS ­ ALTERNATIVE /RENEWABLE ENERGY TECHNOLOGY/ CARBON MARKETS

  ALTERNATIVE ENERGY                                                                                                  RENEWABLE ENERGY
  Waste to Energy: Waste treatment that creates energy in                                                             Wind Energy: Energy present in wind that can be
  the form of electricity and/or heat from a waste source that                                                        converted to mechanical energy for driving electric
  would have alternatively been disposed of in landfill, also                                                         power generators from wind turbines.
  called energy recovery. Some WtE processes result in
                                                                                                                      Solar Energy: The radiant energy of the sun that is
  usable fuel commodity, such as methane, methanol,
                                                                                                                      converted into other forms of energy, such as heat or
  ethanol or synthetic fuels upon completion of process.
                                                                                                                      electricity. The two basic types of solar power are
  Nuclear Energy: The energy liberated by a nuclear                                                                   Photovoltaic cells (PV) ­ solar cells comprised of
  reaction (fission or fusion) or by radioactive decay                                                                semiconductor elements within a PV module that
                                                                                                                      convert light into electrical energy, and Concentrating
  Landfill Gas: Methane produced from landfills derived
                                                                                                                      Solar Power (CSP) - large plants that concentrate
  from decaying organic matter.
                                                                                                                      solar rays to heat water to drive a steam turbine.
  Fuel Cells: An electrochemical device that combines
                                                                                                                      Biofuels: Fuels derived from vegetative matter can be
  hydrogen (or methane, landfill gas, or anaerobic digester
                                                                                                                      substitutes for gasoline and/or diesel fuel.
  gas) and oxygen to produce electricity, heat and water.
                                                                                                                               Ethanol: can be developed through utilization of
  Clean Coal
                                                                                                                               grains (mainly corn), sugars (sugar cane, beets,
         Coal Gasification: the process of converting coal
                                                                                                                               etc.) or cellulous (plant materials such as wood
         to produce syngas (hydrogen, CO2, CO). This
                                                                                                                               chips, grasses etc.) (cellulosic ethanol).
         syngas may be used to power a combustion
         turbine (IGCC ­ Integrated Gasification Combined                                                                      Biodiesel: diesel fuel derived through the
         Cycle), as a fuel source for some other equipment                                                                     processing of vegetable oils or animal tallow.
         or as building block for liquefaction.
                                                                                                                      Biomass: The generation of energy from combustion
               Coal Liquefaction: creating a liquid fuel (whether                                                     or gasification including: agricultural byproducts/ crops
               a diesel product or a light crude) from coal. There                                                    (rice hulls, straw); gases (digester gas, methane);
               are two main processes: direct liquefaction is                                                         liquids (fish oil, liquid acetonitrite, waste, tall oil, waste
               rarely used today due to the costs: indirect                                                           alcohol); solids (medical waste, solid byproducts;
               liquefaction which starts with gasification followed                                                   sludge waste and tires).
               by the Fischer-Tropsch process.
                                                                                                                      Geothermal: Energy generated by heat stored beneath
               Carbon Capture and Sequestration: usually                                                              the Earth's surface. Three different types of power
               associated with Coal Gasification. Carbon                                                              plants - dry steam, flash, and binary - are used to
               Capture is the removal of CO2 from the process                                                         generate electricity from geothermal energy, depending
               either pre-combustion for coal Gasification                                                            on temperature, depth, and quality of the water and
               (easiest) or post-combustion in standard coal                                                          steam in the area. In all cases, the condensed steam
               burning or fossil fuel burning processes.                                                              and remaining geothermal fluid is injected back into the
               Sequestration of the CO2 can be either geologic or                                                     ground to absorb more heat.
               terrestrial. Geologic sequestration is the "burying"
               of CO2 in deep saline aquifers, salt domes,                                                            Hydroelectric: Energy produced by flowing water.
               unmineable coal seams or in basalt formations.                                                         Water is currently the leading renewable energy source
               Terrestrial is associated with plant life removing                                                     used by electric utilities to generate electric power.
               CO2 from the atmosphere. Geologic                                                                      Two methods include:
               sequestration is what is usually referred to when                                                               Run-of-the-river Turbines: turbines are placed
               discussing carbon sequestration                                                                                 on the river floor and are driven by the current
  Recycled Energy: Utilizing the waste heat from industrial                                                                    (flow) of the river.
  processes to develop energy (electricity ­ through the use                                                                   Hydroelectric plants - limited civil work: such
  of a steam turbine generator, steam or hot water). There                                                                     as a very small dam or water from an elevated
  is no additional fuel used to generate this energy.                                                                          lake that is shot down a tube using gravity to help
  Hydrogen: Creating hydrogen either through separation                                                                        drive a hydro turbine situated at a spot below the
  of syngas or through the breakdown of methane or other                                                                       lake.
  hydrocarbons or from the electrolysis of water. Syngas                                                              Ocean Energy: Harnessing the power of the tides,
  and hydrocarbon (including methane) are the usual                                                                   currents or waves. Some technologies include
  sources of hydrogen                                                                                                 underwater turbines and specialized buoys.


                                                                                                     Sources: U.S. Department of Energy: Energy Information Administration: http://www.eia.doe.gov/

Insurance underwritten by member companies of American International Group, Inc. (AIG). The description herein is a summary only. It does not include all terms, conditions and exclusions of the policies described.
Please refer to the actual policies for complete details of coverage and exclusions. Coverage may not be available in all jurisdictions. Issuance of coverage is subject to underwriting. Non-insurance products may be
provided through independent third parties.
                                                                                 ADVANCED ENERGY SOLUTIONS
GLOSSARY OF TERMS ­ ALTERNATIVE /RENEWABLE ENERGY TECHNOLOGY/ CARBON MARKETS


  CARBON MARKETS/ REGULATORY ISSUES                                                                               OUR PRACTICE
  GHG: Greenhouse Gases: carbon dioxide (CO2),                                                                    As the alternative/renewable energy industry continues its
  methane (CH4), nitrous oxide (N2O), hydroflurocarbons                                                           rapid growth, the need for innovation across this complex
  (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride                                                         risk landscape has never been greater. AIG Global Marine
  (SF6).                                                                                                          and Energy has a long history of offering non-traditional
                                                                                                                  products and services that respond to evolving renewable
  CDM: Clean Development Mechanism (under Kyoto
                                                                                                                  energy and climate change issues.
  Protocol) is a project undertaken in a developing country
  that generates reductions in GHG emissions. It                                                                  AIG Global Marine and Energy formed the Advanced
  contributes to the host country's sustainable development,                                                      Energy Solutions Practice to refocus our efforts and build
  and it accrues emission reduction credits. These credits,                                                       upon our expertise and knowledge in this sector. We have
  Certified Emission Reductions (CERs), can be used to                                                            consistently provided our experience and capacity to our
  contribute to the emission reduction commitments of                                                             energy and marine clients and look for the Practice to
  industrialized countries.                                                                                       increase our ability to deliver the insurance, engineering
                                                                                                                  and financial capabilities of AIG to this important and
  JI: Joint Implementation: Mechanism under Kyoto
                                                                                                                  growing customer segment.
  Protocol through which a developed country can receive
  ERUs (Emission Reduction Unit) when it helps to finance
                                                                                                                  Examples of our experience in the Alternative and
  projects that reduce net GHG emissions in another
                                                                                                                  Renewable Energy Sectors, we currently insure:
  developed country.
                                                                                                                        70% of the US Waste to Energy generating
  Carbon Credits: Carbon offset instruments assigned for                                                                capacity
  emissions reductions. There are four types of Kyoto                                                                   60% of the US Geothermal generating capacity
  "credits" - Assigned Amount Units, Certified Emission                                                                 50% of the US Wind generating capacity
  Reductions, Emission Reduction Units, and Removal                                                                     30% of the US Ethanol production capacity
  Units (AAUs, CERs, ERUs and RMUs). Carbon offset
  instruments are used in conjunction with the EU                                                                 Our long-term commitment to energy risks and our
  Emmissions Trading Scheme, Kyoto Protocol, or any                                                               financial strength enable us to fill the needs of our
  other climate change initiative (potential US or regional                                                       alternative energy clients, worldwide, for new and
  initiatives):                                                                                                   expanded risk management and insurance services.
               AAUs: Assigned Amount Units ­ Kyoto Protocol                                                       Services Include:
               unit equal to 1 metric ton of CO2 equivalent. Each                                                        Insurance
               developed country that is a signatory under Kyoto                                                         Loss Control Consulting
               Protocol is issued AAUs. AAUs are typically                                                               Risk Assessment Services
               allocated across specific companies/ plants either                                                        Engineering Evaluations
               by pure allocation or through an auction process.                                                         Technical Services
               CERs: Certified Emissions Reductions ­ carbon                                                             Financing and Investments
               offset instruments created by CDMs
                                                                                                                  Capacity:                                              Up to:
               ERUs: Emission Reduction Units ­ carbon offset
                                                                                                                      Property:                                          $200,000,000
               instruments created by JIs
                                                                                                                      Primary Casualty:                                  $5,000,000
               RMUs: Removal Units ­ carbon offset instruments
                                                                                                                      Excess Casualty:                                   $50,000,000
               associated with Carbon Sequestration in biomass
                                                                                                                      Marine Cargo:                                      $100,000,000 per vessel
               and soils (sinks) in developed nations.
                                                                                                                      Marine Infrastructure
  EU ETS: European Union Emissions Trading Scheme;                                                                    Projects (ALOP):                                   $200,000,000
  EU's response to Kyoto - inforce prior to 2008-2012.
  Renewable Portfolio Standards (RPS): legislation                                                                Contact Us
  enacted in various states and countries that requires a                                                         For more information on how we can help address your
  specific percent of electricity to be produced or consumed                                                      alternative/renewable energy needs e-mail us at:
  from renewable sources. RECs: Renewable Energy
  Certificates are tradable certificates generated by energy
  production from renewable sources. RECs are usually                                                             aigalternativeenergy@aig.com
  purchased by utilities that cannot meet their renewable
  energy requirements.

                                                                                                     Sources: U.S. Department of Energy: Energy Information Administration: http://www.eia.doe.gov/

Insurance underwritten by member companies of American International Group, Inc. (AIG). The description herein is a summary only. It does not include all terms, conditions and exclusions of the policies described.
Please refer to the actual policies for complete details of coverage and exclusions. Coverage may not be available in all jurisdictions. Issuance of coverage is subject to underwriting. Non-insurance products may be
provided through independent third parties.