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Share of Proceeds to Assist in Meeting Costs of Adaptation Workshop on the Adaptation Fund

Share of Proceeds to Assist in Meeting Costs of Adaptation Workshop on the Adaptation Fund Edmonton May 3-5, 2006. Adaptation Share of Proceeds. 2% of CERs issued, except projects in LDCs and 2% of lCERs, tCERs issued, except small-scale projects

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Share of Proceeds to Assist in Meeting Costs of Adaptation Workshop on the Adaptation Fund

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  1. Share of Proceeds to Assist in Meeting Costs of Adaptation Workshop on the Adaptation Fund Edmonton May 3-5, 2006

  2. Adaptation Share of Proceeds 2% of CERs issued, except projects in LDCs and 2% of lCERs, tCERs issued, except small-scale projects Expected prices: CERs>lCERs>tCERs all vary over time and by project SoP for administrative expense = USD 0.10 for first 15,000 CERs and USD 0.20 for additional CERs each year

  3. CDM Registry Account(s) Adaptation Fund holding account managed by institution responsible for sale of CERs or designee Transfer CERs to buyers account in national registry when sold Annual reports of account activity – all receipts, transfers, cancellations – by serial number provide transparency

  4. MonetizationOptions Define SoP Adaptation in money terms Retain current definition and sell CERs • Directly to Annex B Parties • By auction • On an exchange • Using one or more brokers Combinations of sales methods possible

  5. Monetary Definition Define SoP Adaptation in money terms No CERs collected or sold Revenue more predictable; doesn’t fluctuate with prices May not maximize revenue for Adaptation Fund

  6. Direct Sale to Annex B Parties Offer CERs to Annex B Parties at high end of market price range Price set by institution responsible for sale of CERs, not COP/MOP Relatively high prices and low costs Setting prices may be difficult for tCERs and lCERs

  7. Auctions CERs collected sold at auctions CERs from each issuance sold as separate “lot”; combine those from small-scale projects if necessary Transparent, but some delay in collecting revenue, costs may be higher than some other options

  8. Exchange(s) If exchanges list CERs, SoP units could be sold there; perhaps not lCERs, tCERs Allows quick sale, gets market price, low transaction costs Separate issuances are not standard lots, may not list tCERs, lCERS

  9. Broker(s) Retain broker(s) to help sell SoP units Know the market and may get better prices, especially if differentiated May be more costly than other options

  10. Possible Funding Level CERs issued to end of 2012: 1,250 million (range 750 to 2,500) SoP at 2%, 25 million CERs, (range 15 to 50) Average price through 2012: Euro 10 to 15 (range Euro 5 to 25 Adaptation Fund revenue: Euro 325 million (range Euro 125 to 750 million)

  11. Separate Reporting Maximum transparency if revenue from sale of SoP from each issuance is tracked and can be matched to transfer of the units; should be possible Revenue from other sources could then be reported separately as well

  12. COP/MOP Decision COP/MOP can choose a specific option, such as cash payment or direct sale, or provide general guidance, such as maximize revenue, to designated institution COP/MOP will need to designate an institution to manage registry account(s), sell SoP units, and remit funds to Adaptation Fund trustee account

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