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 smallscale 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
2
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
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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
4
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
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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
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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
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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
8
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
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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)
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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
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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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