ADAPTATION FUND TRUST FUND Update on Status of Resources and CER - - PowerPoint PPT Presentation

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ADAPTATION FUND TRUST FUND Update on Status of Resources and CER - - PowerPoint PPT Presentation

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ADAPTATION FUND TRUST FUND Update on Status of Resources and CER Monetization Program June 2011 Prepared by the World Bank as Interim Trustee of the Adaptation Fund Adaptation Fund Trustee The World Bank Agenda 1. Status of Resources Roadmap

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SLIDE 1

ADAPTATION FUND TRUST FUND Update on Status of Resources and CER Monetization Program

June 2011 Prepared by the World Bank as Interim Trustee of the Adaptation Fund

Adaptation Fund Trustee The World Bank

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SLIDE 2

Roadmap

  • 1. Status of Resources
  • 2. CER Monetization
  • CER Price Levels
  • CER Monetization Program

Adaptation Fund Trustee The World Bank

Agenda

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SLIDE 3

Status of Resources

April 30, 2011 (US$ millions)

Adaptation Fund Trustee The World Bank

Cumulative Receipts (1) 240.61

  • Cash receipts from CER sales proceeds

153.89

  • Cash receipts from Donors and Other Sources

85.82

  • Investment Income

0.90 Cumulative Disbursements (2) 19.85

  • Projects and Programs

9.69

  • Administrative Budgets

10.16 Funds Held in Trust (3) = (1) – (2) 220.76

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SLIDE 4

Schedule of Funds Available

April 30, 2011 (US$ millions)

Adaptation Fund Trustee The World Bank

Funds Held in Trust (3) 220.76 Operational Reserve (4) 3.00 Amounts Committed, Not Disbursed (5) 34.56 Funds Available (6) = (3) – (4) – (5) 183.20

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SLIDE 5

Total Programs/Projects Approved to date by NIE and MIE

Adaptation Fund Trustee The World Bank

MIE, 80% NIE, 20%

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SLIDE 6

Status of Resources

Adaptation Fund Trustee The World Bank

  • 50

100 150 200 250

  • 5

10 15 20 25 30 in USD millions

CERs and Donor Proceeds

Monetized CERs Donor Contributions TF Balance

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SLIDE 7

Potential Resources for the AF to end-2012

Adaptation Fund Trustee The World Bank

132

  • 172

227 360 309 18 157 419

  • 50

100 150 200 250 300 350 400 450 FY09 FY10 FY11-Dec 2012 (Est.) USD, millions CER Proceeds High Case CER Proceeds Medium Case CER Proceeds Low Case Funds Available Actual CER Proceeds Paid-in Donor Contributions Potential Resources Medium Case Potential Resources Low Case Potential Resources High Case

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SLIDE 8

Roadmap

  • 2. CER Monetization
  • CER Price Levels

Adaptation Fund Trustee The World Bank

Agenda

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SLIDE 9

CER Price Levels Long-Term Daily Prices

Source: Bloomberg

Adaptation Fund Trustee The World Bank

CER Price Levels

Short-Term Daily Prices

11.0 11.5 12.0 12.5 13.0 13.5 14.0 30-Dec-10 6-Jan-11 13-Jan-11 20-Jan-11 27-Jan-11 3-Feb-11 10-Feb-11 17-Feb-11 24-Feb-11 3-Mar-11 10-Mar-11 17-Mar-11 24-Mar-11 31-Mar-11 7-Apr-11 14-Apr-11 21-Apr-11 28-Apr-11 5-May-11 12-May-11 19-May-11 26-May-11 2-Jun-11 9-Jun-11 16-Jun-11 Euro (per ton)

Weakness in energy commodities Reactionto Japan's earthquake and effect

  • n nuclear power
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SLIDE 10

Adaptation Fund Trustee The World Bank

Source: Bloomberg

  • 1.0

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

CERs Coal Gas

Daily % Increase Day 1 Day 2 Day 3

Energy Commodity Reactions to Earthquake

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SLIDE 11

CER Price Levels European Union Allowances Issues

Adaptation Fund Trustee The World Bank

CER prices have remained in a trading range of approximately €11 to €15 per ton for

  • ver two years

CER Price Levels

Long-Term Daily Prices

7 9 11 13 15 17 19 21 12-Aug-08 11-Oct-08 10-Dec-08 8-Feb-09 9-Apr-09 8-Jun-09 7-Aug-09 6-Oct-09 5-Dec-09 3-Feb-10 4-Apr-10 3-Jun-10 2-Aug-10 1-Oct-10 30-Nov-10 29-Jan-11 30-Mar-11 29-May-11 Euro (per ton)

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SLIDE 12

CER Price Levels European Union Allowances Issues

Adaptation Fund Trustee The World Bank

Source: Point Carbon, BlueNext

CER Price Levels

European Union Allowances Thefts Aftermath

  • Debate whether to classify carbon spot trades as

financial instruments, or enact “tailor-made” rules

  • Other European Commission Proposals
  • Participants cannot see serial numbers on carbon

credits

  • Transfer of carbon credits “shall be final and

irrevocable upon completion”

  • 24 hour delay between initiation and transfer of

credits

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SLIDE 13

Adaptation Fund Trustee The World Bank

Source: UNEP Risoe

10 20 30 40 50 60 Tons (Millions)

  • CER issuance

continues strong

  • By first week in

June: 133.6 million tons, surpassing 2010 total of 132.0 million CER tons

CER Price Levels

CER Monthly Issuance Levels

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SLIDE 14

CER Price Levels Analysts Forecasts – as of January 11, 2011

Adaptation Fund Trustee The World Bank

Source: Point Carbon

  • Concern that there will be no successor to Kyoto
  • Uncertainty for the future of CDM
  • Fragmented markets
  • Positive developments
  • China, India and several other developing nations

planning national programs

  • In U.S., California’s initiative seen as leader for

western states and Canadian provinces.

CER Price Levels

Analysts’ outlook for Post-2012

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SLIDE 15

Roadmap

  • 2. CER Monetization
  • CER Monetization Program

Adaptation Fund Trustee The World Bank

Agenda

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SLIDE 16

CER Monetization Program Sale Record as of February 28, 2011

Adaptation Fund Trustee The World Bank

  • New category of sale

added - Auction

  • 9.42 million CER

tons sold

  • $162 million raised

(€119.2 million)

3,350 5,870 200

CER Tons Sold

(Thousands)

Exchange OTC Auction

CER Monetization Program

Sale Record as of May 31, 2011

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SLIDE 17

CER Monetization Program Monthly Sales by Tonnage

Adaptation Fund Trustee The World Bank

CER Monetization Program Adaptation Fund Auction

  • Rationale
  • Price Discovery for Adaptation Fund CERs
  • Diversification of selling instruments
  • Reputation enhancement
  • Enhanced Visibility
  • Direct link to buyers
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SLIDE 18

CER Monetization Program Monthly Average Price

Adaptation Fund Trustee The World Bank

  • Details
  • Held on BlueNext Exchange on May 18, 2011
  • Sold 200,000 tons at clearing price of €12.52
  • Was 6.8x oversubscribed
  • Observations
  • Strong demand for Adaptation Fund CERs
  • Well publicized in carbon press
  • Seamless execution
  • No directly observable premium over market price
  • Due to lead time, more difficult to predict price
  • Will likely do other auctions in future

CER Monetization Program

Adaptation Fund Auction

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SLIDE 19

Adaptation Fund Trustee The World Bank

  • 200

400 600 800 1,000 1,200 1,400 1,600

Tons

Return to more normal volume with auction and two OTC sales

CER Monetization Program

Monthly Sales by Tonnage

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SLIDE 20

Adaptation Fund Trustee The World Bank

2 4 6 8 10 12 14

Euro (per ton)

Average 12.60

CER Monetization Program

Monthly Average Price

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SLIDE 21

Adaptation Fund Trustee The World Bank

1 2 3 4 5 6

Tons (Millions)

Inventory approximately 3 million tons

CER Monetization Program

Adaptation Fund Inventory

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SLIDE 22

Adaptation Fund Trustee The World Bank

313 371 438

  • 50

100 150 200 250 300 350 400 450 500 Low Mid High USD Millions

Excludes donations, interest income and expenses.

Slight increase from last report’s $360 million forecast Actual sales at high levels – close to 13 Euro Helped by UNEP raising forecast 1.080 billion from 928 million CER tons Euro average about 4 cents higher

CER Monetization Program

Potential Resources from Monetization until end-2012