ets world bank carbon market 2007
TRANSCRIPT
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TheWorld
an
a e an ren s o e
,World Bank
CARBON EXPOKoeln, May 2, 2007
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Methodolo
This stud is based on the followin :
Analysis of the World Banks confidential project database;
Interviews with market players (natural buyers (Europe & Japan),fund mana ers develo ers sellers DNAs rivate e uit fundshedge funds, banks, traders & brokers), assisted by Natsource;
A comprehensive review of published literature; Cross-reference with IETA market sentiment survey.
Project database includes:
More than 930 ro ect-based transactions ERPAs si ned Completeness of information >90% in all fields except on
exact terms and price of transaction >60%.
Aggregate data on allowance markets:
From major exchanges and OTC sources.
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Overall US$ 30 bil lion (06) > US$ 11 billion (05)
EUAs market US$ 24.4 bi ll ion (06) > US$ 7.9 billion (05)
ro ec ar e ou es
US$ 4.8 bil lion (06) > US$ 2.4 billion (05)
Secondary market emergesor o os o guaran ee comp ance asse s
US$ 0.44 bill ion + (06) through intermediaries
Voluntary Market expands US$ 0.1 bill ion + (06) confirmed
Price Signal to Market Drives Capital Allocation
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Volumes transacted in 2006(in MtCO2e)
- Transactions
EU Emission16
Trading SchemeCDMSecondary
1,10025 +
UK ETSNew South WalesCertificates
OtherCom liance
Voluntary& Retail
Exchange1910 MtCO2e
20
+
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Markets for Allowances
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Disconnected EU ETS markets
35EUA price
/tCOSpot price (Pnxt)
PhI is long pushing EUA prices < 2
30 Dec 08 (ECX)
energy price & no EUA banking
Utilities have covered Ph I position CERs to be banked to Ph II
20PhII expected to be short, > 12
15
: more a owances were o e ssue yMember States than the likely quantity ofactual emissions in 2008-12 meeting theKyoto commitments would be severely
10compromised and little or no environmental
benefit would be provided. COM(2006) 725
Market prices reflect analysts
0
shortfall consensus:900-1,500 MtCO2e
(level of effort required = 8-10 %)-
J
-0
F
-0
M
-0
A
-0
M
-0
J
-0
J
-0
J
-0
A
-0
S
-0
O
-0
N
-0
D
-0
J
-0
F
-0
M
-0
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Pro ect-based transactions
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Pro ect-based Credits:Volumes and prices up
600
actions
Voluntary
Other compl iance US$ 10.4 /tCO2e
400sedtran JI
CDM US$ 7.2 /tCO2eCER I $ 10.9
ERU $ 8.7
300roject-b
MtCO2e
)
200
lu
meof
US$ 5.2 /tCO2e
100
annualv
1998 1999 2000 2001 2002 2003 2004 2005 2006
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28
24
US$ per tCO2e
20
12
8
+52%
+43%4
pre-CER CER ERU 2ndary CER
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CDM&JI Bu ersEU Private Sector 75% of demand
s are o vo umesOther & Unsp.
3%Other Europe
12% Other & Unsp.7%
Other Europe10%
UK
Japan7%
15%
Japan
UK50%
Europe-Baltic
Sea
Netherlands4%
Spain7%
S ain
Austria3%
3%
Netherlands8%
urope- a cSea9%
6%Italy10%
Jan. 2005 to Dec. 2005 Jan. 2006 to Dec. 2006
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CDM SellersChina leads supply
(share of volumes)
500
e)
400
acted(MtCO2
Other & Unsp.
Africa
R. of Latin America
BrazilR. of Asia
12%
300
lvolumestran
.
India
China
ChinaAfrica
3%
7%
100
200
ryC
DMa
nnual
Other & Unsp.7%
Brazil
0
prima4%
R. of LatinAmerica
6%
Jan. 2006 to Dec. 2006
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CDM Asset classesShare of Clean Energy Rises
(share of volumes)
N2OClean energy: 11% Clean energy: 25%
HFC
Other
5%Hydro
3%
Hydro
6%
13%13%
n
2%
Other Renewables
Biomass
3%
Wind
5%
HFC34%
Biomass
3%
Other Renewables
LFG
CMM
7%
EE+Fuel s.
1% EE+Fuel s .
9%
Agro-forestryCMMAnimal Waste
2%
2%1%7%5%
2%
Jan. 2005 to Dec. 2005 Jan. 2006 to Dec. 2006
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CDM & Clean Energy
Investment leverage 2002-2006
Cumulative CDM deals =
US$ 7.8 billion
,per year of commitment
16
e)
US$ ~2.7 bil lion for cleanenergy (current prices) 12
,currentval
Other
EE+Fuel s.
Other Renewables
Biomass
car on =~ nves efor clean energy 8unt(US$b
lln Wind
Hydro
on everagefor clean energy in
developing countries since
4
estmentamo
2002
US$100 bill ion invested 0
2
2002 2003 2004 2005 2006
Inv
2006
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Outlook
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Market balance 2008-2012
2008-12 demand for Kyoto mechanisms (Analysts expectations)
Demand from EU ETS = 1,140 MtCO2e (900 -1,400 MtCO2e)Based on varying assumptions of growth adjusted
for improvement in carbon intensity
Expected demand from EU Governments: 450 MtCO2eExpected demand from Japan: 100-500 MtCO2e (avg: 350MtCO2e)
xpec e eman rom o urope an : 2e
Based on varying assumptions of Parties about performance ofadditional (and exist ing) pol icies and measures
Will sufficient supply be stimulated, contracted and delivered?
CDM/JI: How many reductions wil l they deliveron time?
AAU/GIS: How many, when and at what price? Some host countrieshave expressed their interest in setting GIS (Ukraine, Latvia)
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Ex ected K oto Balance
Already contracted Already contracted Potential su l917 MtCO2e
Residual demand
1,083 MtCO2e
930 MtCO2eNot yet contracted
> 975 MtCO2e
6000-7,100 MtCO2e
2 500
Canada ??
1 500
2 000
(MtCO2e
)
Japan
RoEurope + NZJI
1 000Volum
-
CDM
0
500 EU ETS
Demand for KMs CDM/JI supply AAU/GIS: amount not yet contracted
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Beyond 2012:
A bridge to a safe climate future ?
eve op ng coun r es an s ave s rong yresponded to EU and Japan demand.
ar e s o manage em ss ons avedemonstrated their ability to source ERs.
xper ence s ou encourage coun r esconsidering ambitious targets to .
This requires efforts in all sectors, including
market.
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,
the development and deployment of
would stall, and the evolution of a
ynam c an qu g o a mar et woube severely undermined.
omm ss on, c o erCOM(2006) 725
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Thank you
Full report available at
www.carbonfinance.org