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

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 2. CER Monetization • CER Price Levels • CER Monetization Program Adaptation Fund Trustee The World Bank

Status of Resources April 30, 2011 (US$ millions) 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 Adaptation Fund Trustee The World Bank

Schedule of Funds Available April 30, 2011 (US$ millions) 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 Adaptation Fund Trustee The World Bank

Total Programs/Projects Approved to date by NIE and MIE NIE, 20% MIE, 80% Adaptation Fund Trustee The World Bank

Status of Resources CERs and Donor Proceeds 30 250 25 200 20 in USD millions 150 15 100 10 50 5 - - Monetized CERs Donor Contributions TF Balance Adaptation Fund Trustee The World Bank

Potential Resources for the AF to end-2012 450 419 400 227 360 CER Proceeds High Case 350 172 309 CER Proceeds Medium Case 300 CER Proceeds Low Case 132 USD, millions 250 Funds Available 200 Actual CER Proceeds 157 Paid-in Donor Contributions 150 - Potential Resources Medium Case 100 Potential Resources Low Case 50 Potential Resources High Case - 18 - FY09 FY10 FY11-Dec 2012 (Est.) Adaptation Fund Trustee The World Bank

Agenda 2. CER Monetization • Roadmap CER Price Levels Adaptation Fund Trustee The World Bank

CER Price Levels Short-Term Daily Prices 14.0 Weakness in energy commodities 13.5 CER Price Levels Long-Term Daily Prices 13.0 Reactionto Japan's Euro (per ton) earthquake and effect 12.5 on nuclear power 12.0 11.5 11.0 21-Apr-11 28-Apr-11 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 5-May-11 12-May-11 19-May-11 26-May-11 2-Jun-11 9-Jun-11 16-Jun-11 Adaptation Fund Trustee The World Bank Source: Bloomberg

Energy Commodity Reactions to Earthquake 7.0 6.0 5.0 4.0 Daily % Increase Day 1 Day 2 3.0 Day 3 2.0 1.0 0.0 CERs Coal Gas -1.0 Adaptation Fund Trustee Source: Bloomberg The World Bank

CER Price Levels Long-Term Daily Prices 21 CER Price Levels 19 European Union Allowances Issues CER prices have 17 remained in a trading range of 15 Euro (per ton) approximately € 11 to € 15 per ton for 13 over two years 11 9 7 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 Adaptation Fund Trustee The World Bank

CER Price Levels European Union Allowances Thefts Aftermath CER Price Levels  Debate whether to classify carbon spot trades as European Union Allowances Issues 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 Adaptation Fund Trustee Source: Point Carbon, BlueNext The World Bank

CER Price Levels CER Monthly Issuance Levels 60 50  CER issuance continues strong 40 Tons (Millions)  By first week in 30 June: 133.6 million tons, surpassing 20 2010 total of 132.0 million CER tons 10 0 Source: UNEP Risoe Adaptation Fund Trustee The World Bank

CER Price Levels Analysts’ outlook for Post -2012  Concern that there will be no successor to Kyoto  Uncertainty for the future of CDM CER Price Levels  Fragmented markets Analysts Forecasts – as of January 11, 2011  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. Adaptation Fund Trustee The World Bank Source: Point Carbon

Agenda 2. CER Monetization • Roadmap CER Monetization Program Adaptation Fund Trustee The World Bank

CER Monetization Program Sale Record as of May 31, 2011 CER Tons Sold (Thousands)  New category of sale added - Auction CER Monetization Program 200 Sale Record as of February 28, 2011 3,350  9.42 million CER tons sold 5,870  $162 million raised ( € 119.2 million) Exchange OTC Auction Adaptation Fund Trustee The World Bank

CER Monetization Program Adaptation Fund Auction  Rationale  Price Discovery for Adaptation Fund CERs CER Monetization Program  Diversification of selling instruments Monthly Sales by Tonnage  Reputation enhancement  Enhanced Visibility  Direct link to buyers Adaptation Fund Trustee The World Bank

CER Monetization Program Adaptation Fund Auction  Details  Held on BlueNext Exchange on May 18, 2011  Sold 200,000 tons at clearing price of € 12.52  CER Monetization Program Was 6.8x oversubscribed Monthly Average Price  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 Adaptation Fund Trustee The World Bank

CER Monetization Program Monthly Sales by Tonnage 1,600 1,400 Return to more 1,200 normal volume with auction and two OTC sales 1,000 Tons 800 600 400 200 - Adaptation Fund Trustee The World Bank

CER Monetization Program Monthly Average Price Average 12.60 14 12 10 Euro (per ton) 8 6 4 2 0 Adaptation Fund Trustee The World Bank

CER Monetization Program Adaptation Fund Inventory 6 5 4 Inventory approximately 3 million tons Tons (Millions) 3 2 1 0 Adaptation Fund Trustee The World Bank

CER Monetization Program Potential Resources from Monetization until end-2012 Slight increase 500 from last report’s 438 $360 million 450 371 forecast 400 Actual sales at 313 350 high levels – close 300 to 13 Euro USD Millions 250 Helped by UNEP 200 raising forecast 1.080 billion from 150 928 million CER tons 100 50 Euro average about 4 cents - higher Low Mid High Excludes donations, interest income and expenses. Adaptation Fund Trustee The World Bank