Zammit Cutajar

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 CERsgtlCERsgttCERs 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
Monetization Options

• 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 doesnt 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