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

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

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AFB/B.13/Inf.5 March 9, 2011 Adaptation Fund Board Thirteenth Meeting Bonn, March 17-18, 2011 PRESENTATION ON CER MONITIZATION ADAPTATION FUND TRUST FUND Update on Status of Resources and CER Monetization Program March 2011 Prepared by the

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SLIDE 1

AFB/B.13/Inf.5 March 9, 2011 Adaptation Fund Board Thirteenth Meeting Bonn, March 17-18, 2011

PRESENTATION ON CER MONITIZATION

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SLIDE 2

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

March 2011 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. Trustee Update
  • Recent developments
  • Status of Resources
  • 2. CER Monetization
  • CER Price Levels
  • CER Monetization Program

Adaptation Fund Trustee The World Bank

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SLIDE 4

Trustee Update Recent Developments

  • CMP adopted extension of Interim Trustee mandate

in Cancun

  • World Bank Executive Directors agreed to extension
  • n February 18, 2011
  • AF Trust Fund Independent Audit concluded

successfully, covering the period from inception to June 30, 2010.

  • Second project funds transfer made - Honduras

Adaptation Fund Trustee The World Bank

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SLIDE 5

Status of Resources

January 31, 2011 (US$ millions)

Adaptation Fund Trustee The World Bank

Cumulative Receipts (1) 224.50

  • Cash receipts from CER sales proceeds

138.16

  • Cash receipts from Donors and Other Sources

85.59

  • Investment Income

0.75 Cumulative Disbursements (2) 12.63

  • Projects and Programs

2.92

  • Administrative Budgets

9.71 Funds Held in Trust (3) = (1) – (2) 211.88

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SLIDE 6

Schedule of Funds Available

January 31, 2011 (US$ millions)

Adaptation Fund Trustee The World Bank

Funds Held in Trust (3) 211.88 Operational Reserve (4) 3.00 Amounts Committed, Not Disbursed (5) 21.89 Funds Available (6) = (3) – (4) – (5) 187.08

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SLIDE 7

Total Programs/Projects Approved to date by NIE and MIE

Adaptation Fund Trustee The World Bank

MIE, 64% NIE, 36%

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SLIDE 8

Status of Resources

Adaptation Fund Trustee The World Bank

  • 50.00

100.00 150.00 200.00 250.00 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 in USD millions

CERs and Donor Proceeds

Monetized CERs Donor Contributions TF Balance

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SLIDE 9

Status of Resources

Adaptation Fund Trustee The World Bank

  • 5.00

10.00 15.00 20.00 25.00 30.00 in USD millions

CERs and Donor Proceeds

Monetized CERs Donor Contributions

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SLIDE 10

Potential Resources for the AF to end-2012

Adaptation Fund Trustee The World Bank 305

18 157 408 353

  • 50

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

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SLIDE 11

Roadmap

  • 2. CER Monetization
  • CER Price Levels

Adaptation Fund Trustee The World Bank

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SLIDE 12

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 Euro (per ton)

CER prices have remained in a trading range of approximately €11 to €15 per ton for nearly two years. Recently have trended near bottom of range.

Source: Bloomberg

Adaptation Fund Trustee The World Bank

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SLIDE 13

CER Price Levels Short-Term Daily Prices

Adaptation Fund Trustee The World Bank

11.0 11.2 11.4 11.6 11.8 12.0 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 Euro (per ton)

Flat line for 6 daysin January

Source: Bloomberg

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CER Price Levels European Union Allowances Issues

Adaptation Fund Trustee The World Bank

Events

  • In November 2010, cyber-criminals hacked into

Romanian Registry and stole EUAs.

  • Early January, EUAs stolen from Czech Republic,

Austrian and Greek Registries.

  • Approximately 3.2 million EUA s reported missing –

market value of almost € 50 million ($68 million).

  • Europol stated that thefts were linked to organized

crime groups and arrests have been made.

  • Stolen EUAs traced to other registries.
  • ADAPTATION FUND CERS NOT AFFECTED
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CER Price Levels European Union Allowances Issues

Adaptation Fund Trustee The World Bank

Measures Taken

  • On January 19th 2011, European Commission

suspended trading on all European Union Registries.

  • Registries are being let back in once they demonstrate

security will prevent subsequent theft.

  • As of March 1st 2011, only 10 of 30 registries had

reopened.

  • BlueNext independently suspended all trading.
  • Spot trading declined significantly, but derivatives

markets continued to trade.

Source: Point Carbon, BlueNext

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CER Price Levels European Union Allowances Issues

Adaptation Fund Trustee The World Bank

Possible Improvements

  • Enhanced security, equivalent to banking standards.
  • Make system more centralized, with one set of standards.
  • Improve proof of identify for opening registry accounts -

photographic and other documentation.

  • Limit the opening of registry accounts to compliance

buyers and qualified dealers.

  • Clarify status of stolen EUAs purchased in good faith.

Other

  • Concerns carousel trading (VAT fraud) and money

laundering may be continuing undetected.

Source: Point Carbon, BlueNext

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CER Price Levels Adaptation Fund CER Holdings

Adaptation Fund Trustee The World Bank

Source: Bloomberg

BlueNext Swiss Registry 85 thousand tons $1.4 million value Independent Swiss Registry 35 thousand tons $575 thousand value

Volumes, prices and exchange rates as of February 28, 2011

Clean Development Mechanism Registry 2.7 million tons $45 million value

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CER Price Levels CER Monthly Issuance Levels

Adaptation Fund Trustee The World Bank

Source: UNEP Risoe

CER issuance in December 2010 was 50.2 million tons - double the highest monthly total ever

10 20 30 40 50 60 Tons (Millions)

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SLIDE 19

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

Adaptation Fund Trustee The World Bank

5 10 15 20 25 Euro (per ton)

2011 2012

Source: Point Carbon

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Roadmap

  • 2. CER Monetization
  • CER Monetization Program

Adaptation Fund Trustee The World Bank

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SLIDE 21

CER Monetization Program Sale Record as of February 28, 2011

Adaptation Fund Trustee The World Bank

  • Sales reduced by

BlueNext closure from Jan 20th to Feb 3rd, and Swiss Registry closure February 12th to present.

  • 8.2 million CER Tons

Sold

  • $139.1 million raised

(€103.2 million) 3.1 5.1

CER Tons Sold

(Millions)

Exchange OTC

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CER Monetization Program Monthly Sales by Tonnage

Adaptation Fund Trustee The World Bank

  • 200

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

Tons

Reduced sales due to Exchange and Registry closings

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SLIDE 23

CER Monetization Program Monthly Average Price

Adaptation Fund Trustee The World Bank

2 4 6 8 10 12 14

Euro (per ton)

Average 12.56

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SLIDE 24

CER Monetization Program Adaptation Fund Inventory

Adaptation Fund Trustee The World Bank

1 2 3 4 5 6

Tons (Millions)

Inventory just under 3 million tons

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CER Monetization Program Potential Resources from Monetization 2013 to 2020

Adaptation Fund Trustee The World Bank

Based on Point Carbon estimate that 2.5 billion CERs could be issued in post- Kyoto period.

602 836 1,104

  • 200

400 600 800 1,000 1,200 Low Mid High USD Millions

Excludes donations, interest income and expenses.