PRESENTATION ON CER MONETIZATION ADAPTATION FUND TRUST FUND Update - - PDF document

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PRESENTATION ON CER MONETIZATION ADAPTATION FUND TRUST FUND Update - - PDF document

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AFB/B.17/Inf.4 14 March, 2012 Adaptation Fund Board Seventeenth Meeting Bonn, 14-16 March, 2012 PRESENTATION ON CER MONETIZATION ADAPTATION FUND TRUST FUND Update on Status of Resources and CER Monetization Program March 2012 Prepared by the

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SLIDE 1

AFB/B.17/Inf.4 14 March, 2012 Adaptation Fund Board Seventeenth Meeting Bonn, 14-16 March, 2012

PRESENTATION ON CER MONETIZATION

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SLIDE 2

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

March 2012 Prepared by the World Bank as Interim Trustee of the Adaptation Fund

Adaptation Fund Trustee

The World Bank

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SLIDE 3

Roadmap

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

Adaptation Fund Trustee

The World Bank

Agenda

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SLIDE 4

Status of Resources

December 31, 2011 (US$ millions)

Adaptation Fund Trustee

The World Bank

Cumulative Receipts (1) 273.13

  • Cash receipts from CER sales proceeds

168.34

  • Cash receipts from Donors and Other Sources

103.54

  • Investment Income

1.25 Cumulative Disbursements (2) 30.17

  • Projects and Programs

16.92

  • Administrative Budgets

13.25 Funds Held in Trust (3) = (1) – (2) 242.96

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SLIDE 5

Schedule of Funds Available December 31, 2011

(US$ millions)

Adaptation Fund Trustee

The World Bank

Funds Held in Trust (3) 242.96 Operational Reserve (4) 3.00 Amounts Committed, Not Disbursed (5) 93.40 Funds Available (6) = (3) – (4) – (5) 146.57

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SLIDE 6

Total Programs/Projects Approved to date by NIE and MIE

Adaptation Fund Trustee

The World Bank

MIE, 83% NIE, 17%

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SLIDE 7

Status of Resources

Adaptation Fund Trustee

The World Bank

  • 50

100 150 200 250 300

  • 5

10 15 20 25 30 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 in USD millions

CERs and Donor Proceeds

Monetized CERs Donor Contributions TF Balance

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SLIDE 8

Potential Resources for the AF to end-2012

Adaptation Fund Trustee

The World Bank

204 187 18 157 223

  • 50

100 150 200 250 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 9

Adaptation Fund Trustee

The World Bank

Adaptation Fund Trust Fund Investment Management

  • The Adaptation Fund Trust Fund liquid portfolio returned 0.25% through the

2011 calendar year. In keeping with the Tranche 0 investment strategy, Adaptation Fund assets were primarily invested in short dated deposits in highly rated global financial institutions.

  • AF resources are not currently invested in other, longer term Tranches, on

the expectation that all funds would be required for projects and programs before the end of the one-year horizon period applicable to the next available investment tranche (Tranche 1).

  • Cash transfer projections provided by the AF Secretariat indicate that at least

$100 million in AF Trust Fund resources will remain in the AF Trust Fund for at least 1 year, therefore based on the above, and liquidity requirements of the AF, the Trustee will allocate the AF Trust Fund balances between Tranche 0 and Tranche 1 based on the above, and liquidity requirements of the AF.

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SLIDE 10

Adaptation Fund Trustee

The World Bank

Adaptation Fund Investment Returns

Adaptation Fund returns are closely linked to USD Libor.

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SLIDE 11

Roadmap

  • 2. CER Monetization
  • CER Price Levels

Adaptation Fund Trustee

The World Bank

Agenda

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SLIDE 12

3 5 7 9 11 13 30-Dec-10 29-Jan-11 28-Feb-11 30-Mar-11 29-Apr-11 29-May-11 28-Jun-11 28-Jul-11 27-Aug-11 26-Sep-11 26-Oct-11 25-Nov-11 25-Dec-11 24-Jan-12 23-Feb-12 Euro (per ton)

Adaptation Fund Trustee

The World Bank

11

CER Price Levels Daily Prices

Source: Bloomberg

All-time low of 3.51 Euro per ton on January 16, 2012

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SLIDE 13

30 40 50 60 70 80 90 100 110 120 31-Aug-11 15-Sep-11 30-Sep-11 15-Oct-11 30-Oct-11 14-Nov-11 29-Nov-11 14-Dec-11 29-Dec-11 13-Jan-12 28-Jan-12 12-Feb-12 27-Feb-12

Oil CERs Gas

12

CERs and Energy Commodities

Indexed Sept 2011 to Feb 2012

Source: Bloomberg

Adaptation Fund Trustee

The World Bank

Recovery correlates with Oil and Gas

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SLIDE 14

10 20 30 40 50 60 70 80 90 100

16-Dec-11 30-Dec-11 13-Jan-12 27-Jan-12 10-Feb-12 24-Feb-12 9-Mar-12 23-Mar-12 6-Apr-12 20-Apr-12 4-May-12 18-May-12 1-Jun-12 15-Jun-12 29-Jun-12 13-Jul-12 27-Jul-12

December 20th: EU Environmental Committee votes to withhold 1.4 bill EUAs in Phase 3; Carbon prices rise over 18% February 28th: Industrial Committee agrees to set-aside, but does not specify amount; Carbon prices fall 5% June/July Full Parliament and Environmental Minister's vote to become law

13

European Union Set-Aside

Timeline

Adaptation Fund Trustee

The World Bank

Source: Point Carbon

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SLIDE 15

14

Aviation Issue

Adaptation Fund Trustee

The World Bank

Aviation accounts for between 2% to 3% of greenhouse gas pollution

  • Incorporated in European Trading System as of January 1st
  • Thomas Reuters Point Carbon estimates cost to airlines will be over

500 million Euro for 2012 Governments of United States, China, India, Russia and over 20 other countries oppose

  • United Nation’s International Civil Aviation Organization asked to

help find solution

Source: Point Carbon

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SLIDE 16

Roadmap

  • 2. CER Monetization
  • CER Monetization Program

Adaptation Fund Trustee

The World Bank

Agenda

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SLIDE 17

16

CER Monetization

Adaptation Fund Trustee

The World Bank

CER Prices break out of 2+ year trading range of 11 – 14 in early July 2011

  • Monetized 9.5 million tons locking in average price of 12.59 per ton
  • Continued to sell July through October 5th on BlueNext, selling 430,000

tons at an average price of 8.71 per ton

  • Added 3.6 mill Euro or USD 4.7 mill over BlueNext Closing Average Price

Year Selling Period Average Price Achieved BlueNext Closing Average Added Value 2009 5/9 to 12/31 12.26 12.57

  • 0.31

2010 1/1 to 12/31 12.70 12.52 0.18 2011 1/1 to 10/5 11.75 11.04 0.71 Entire Period 12.43 12.07 0.36

Source: Bloomberg

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SLIDE 18

3 4 5 6 7 8 9 30-Sep-11 15-Oct-11 30-Oct-11 14-Nov-11 29-Nov-11 14-Dec-11 29-Dec-11 13-Jan-12 28-Jan-12 12-Feb-12 27-Feb-12 Euro (per ton)

Adaptation Fund Trustee

The World Bank

17

Selling Stoppage

Source: Bloomberg

Oct 5 CDM Closed 7.85 Oct 31 CDM Emergency Only Basis 6.93 Nov 21 CDM Opens New Procedure 6.31 Nov 22 Board Instructs to Stop 6.50 Feb 1 Selling Resumes 4.13

Opportunity Costs

  • CDM Stoppage:

270,000 tons at 7.22 per ton

  • Board Stoppage:

490,000 at 4.53 per ton Cumulative 10 million tons sold by Feb 6, 2012

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SLIDE 19

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CER Monetization Program

Sale Record as of February 29, 2012

10.18 million CER tons sold $170 million raised (€125 million) 466 separate transactions

Adaptation Fund Trustee

The World Bank

4,110 5,870 200

CER Tons Sold

(Thousands)

Exchange OTC Auction

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SLIDE 20
  • 200

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

Tons (thousands)

19

CER Monetization Program

Monthly Sales by Tonnage

Sales resumed in February, 220,000 tons sold Adaptation Fund Trustee

The World Bank

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SLIDE 21

2 4 6 8 10 12 14

Euro (per ton)

20

CER Monetization Program

Monthly Average Price

Overall Average 12.26 Adaptation Fund Trustee

The World Bank

Average for February 4.52

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SLIDE 22

21

CER Monetization Program

Adaptation Fund Inventory

Adaptation Fund Trustee

The World Bank

1 2 3 4 5 6 7

Tons (Millions)

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SLIDE 23

22

CER Monetization Program

Adaptation Fund Trustee

The World Bank

Appendix Daily Sales Record

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SLIDE 24

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February 2012 Daily Sales

Adaptation Fund Trustee

The World Bank

February, 2012 Volume (tons) Adaptation Fund Sale Price BlueNext Closing Price Diff 1-Feb-12 10,000 4.11 4.13

  • 0.02

2-Feb-12 10,000 4.35 4.28 0.07 3-Feb-12 10,000 4.24 4.13 0.11 6-Feb-12 10,000 4.25 4.24 0.01 7-Feb-12 10,000 4.26 4.23 0.03 8-Feb-12 10,000 4.06 4.06 0.00 9-Feb-12 10,000 3.90 3.88 0.02 10-Feb-12

  • n/a

3.83 n/a 13-Feb-12 10,000 3.75 3.75 0.00 14-Feb-12 10,000 3.92 4.02

  • 0.10

15-Feb-12 10,000 4.23 4.22 0.01 15-Feb-12 10,000 4.23 4.22 0.01 16-Feb-12 10,000 4.68 4.75

  • 0.07

16-Feb-12 10,000 4.79 4.75 0.04 17-Feb-12 10,000 5.07 5.08

  • 0.01

20-Feb-12

  • n/a

4.80 n/a 21-Feb-12 10,000 4.92 4.92 0.00 22-Feb-12 10,000 5.00 4.97 0.03 23-Feb-12

  • n/a

4.77 n/a 24-Feb-12 10,000 5.10 5.18

  • 0.08

24-Feb-12 10,000 5.10 5.18

  • 0.08

27-Feb-12 10,000 5.11 5.12

  • 0.01

28-Feb-12 10,000 4.92 4.94

  • 0.02

29-Feb-12 10,000 4.69 4.61 0.08 29-Feb-12 10,000 4.70 4.61 0.09 Total 220,000 4.52 4.47 0.05

Source: Bloomberg