Destination Green ICAO Symposium on Aviation and Climate Change, Destination Green, 14 16 May 2013 State and trends of carbon pricing initiatives around the world Alexandre Kossoy Climate Policy and Finance Department World Bank
Steady increase of global market value (in Billion US$) 176 $180 Other project-based Other allowances Secondary CER 135 144 159 Primary CER post-2012 $120 Primary CER pre-2013 EU Allowances 63 $60 31 11 $0 2005 2006 2007 2008 2009 2010 2011
EU and other markets increasing value (in Billion US$) post-2012 CDM 2.0 +63% New Zealand 0.4 +249% N. America 0.5-18% +12% Secondary CDM + JI 23.1 pre-2013 CDM 1.0 JI AAU 0.3 0.3 EU ETS Allowances 147.8-32% -36% -49% +11%
f(price) = macro-economic scenario & asset risk profile
Contraction of the CDM market 8,000 Pre-2013 market values (US$ million) 6,000 Pre-2013 CER 4,000 2,000 0 2007 2008 2009 2010 2011
annual volume of CDM&JI transactions (MtCO 2 e) CDM & JI Buyers (pre-2013) 600 Other & Unsp. 500 Other Europe 2011 400 UK Switzerland UK 40% Other Europe 4% Other & Unsp. 7% 300 200 100 0 Denmark, Finland, Norway, and Sweden France, Germany, Italy, Netherlands, Portugal, and Spain Japan 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Switzerland 23% Denmark, Finland, Norway, and Sweden 6% Japan 1% France, Germany, Italy, Netherlands, Portugal, and Spain 19% Other Europe includes Ireland, Austria, Belgium, Luxembourg, Iceland and Greece. Other and Unsp. include s USA, Australia, Canada, New Zealand, Rep. of Korea, and others unspecified.
Pre-2013 volumes transacted (MtCO2e) Who s selling Pre-2013 600 Other & Unsp. Others Asia 7% 500 400 Africa Latin America Others Asia China China 87% Africa 4% Latam 2% 300 200 India 5% Post-2012 Vietnam 7% Others Asia 13% 100 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 China 43% Others Africa 13% Latam 11% DRC 5% Nigeria 2% South Africa 1%
MtCO 2 e Market projections indicate constrained demand over 2013-20 Other Annex B** Australia EU gov* EU ETS CDM others CDM ETS-eligible 4000 3000 3.2 GtCO 2 e 2000 1.7 GtCO 2 e New CER sublimit after the EU-AU link 1000 0 Maximum demand (conservative scenario) *Including Iceland, Liechtenstein, and Norway ** Including New Zealand, North America, and Switzerland Supply
Remarkable cumulative numbers 8,000 Pre-2013 and post-2012 market values (US$ million) 1.06 bln CERs & ERUs already surrendered by EU ETS installations equivalent to the annual emissions of AU and SA combined 6,000 4,000 2,000 0 Pre-2013 CER 2007 2008 2009 2010 2011 Cumulative pcers transacted equals 2.4 bln CERs in 2002-11 larger than annual EU ETS emissions and 80% of Kyoto s total targets (~3 bln tco2e over 2008-12) ERPAs reach US$28 bln (and will support about US$150 bln in lowcarbon investments, mostly from private sector)
Where Next for Carbon Markets? 40 35 2 degrees 39 per tco 2 e ($150 billion p.a.) 30 30.00 25 25.00 Copenhage n high 20-28 per tco 2 e ($31-43 billion p.a.) 20 20.00 15 15.00 Copenhage n low 12-20 per tco 2 e ($5-9 billion p.a.) 10 10.00 5 5.00 0 0.00 OVERVIEW OF CARBON FINANCE VEHICLES
A Growing Menu of Climate Finance Instruments to Catalyze and Leverage $115 mln $648 mln OVERVIEW OF CARBON FINANCE VEHICLES 11 11
WB: Climate co-benefits in IBRD/IDA lending Adaptation Mitigation $7.0 bln $7.1 bln $4.6 bln $2.3 bln OVERVIEW OF CARBON FINANCE VEHICLES FY11 FY12 FY11 FY12
A Growing Menu of Climate Finance Instruments to Catalyze and Leverage $115 mln $648 mln OVERVIEW OF CARBON FINANCE VEHICLES 13 13
The Unit s first generation of carbon funds April 2000 May 2002 March 2003 March 2004 May 2004 Prototype Carbon Fund Netherlands Clean Development Mechanism Facility Community Development Carbon Fund Italian Carbon Fund BioCarbon Fund Tranches I & II World s First Global Carbon Fund $220,000,000 Pioneer purchaser of CDM ** Poorest country focused $128,600,000 Government & private sector $155,600,000 Afforestation, Reforestation, REDD+ & soil carbon $90,400,000 August 2004 January 2005 March 2005 August 2006 March 2007 Netherlands European Carbon Facility Danish Carbon Fund Spanish Carbon Fund Umbrella Carbon Facility Tranches I & II Carbon Fund for Europe Purchasing JI Government & private sector Government & private sector Adding liquidity to market at key moments Governments & private sector ** 90,000,000 220,000,000 904,100,000 50,000,000 ** Unpublished OVERVIEW OF CARBON FINANCE VEHICLES 14
Others Industrials Utilities Oil & Gas Financials 57 private sector partners OVERVIEW OF CARBON FINANCE VEHICLES
24 Public Sector Partners AUSTRIA FINLAND JAPAN SPAIN AUSTRALIA AGENCE FRANÇAISE DE DÉVELOPPEMENT JAPAN INTERNATIONAL COOPERATION AGENCY SWEDEN REGIONAL GOVERNMENTS OF BRUSSELS-CAPITAL, FLEMISH AND WALLOON REGIONS GERMANY LUXEMBOURG SWITZERLAND NETHERLANDS DENMARK IRELAND NORWAY THE UNITED KINGDOM THE EUROPEAN COMMISSION ITALY PORTUGAL THE UNITED STATES OVERVIEW OF CARBON FINANCE VEHICLES
Responding to the challenges in the market (1 of 2) preparing for the future with market readiness support WB Facility Focus Resources Partners Program Partnership for Market Readiness Capacity building to support market based tools for GHG reduction $115 million* 28 country participants including 12 donor governments Supporting countries development of readiness component for market instruments Helping developing countries explore, pilot and test emissions trading Building on country priorities for low-carbon growth National & sub-national REDD+ pioneer $258 million 36 country participants including 15 donor governments Guiding readiness and carbon finance for REDD+ Forging partnerships between developed and developing countries FCPF Readiness Fund Enhancing capacity building and technical assistance OVERVIEW OF CARBON FINANCE VEHICLES *Target, current $90 million raised 17
Responding to the challenges in the market (2 of 2) pairing readiness with action: carbon credit purchases WB Facility Focus Resources Partners Scaling-up carbon finance $147 million 6 selling country, 3 buying country and 2 donor participants Testing purchase of REDD+ credits $390 million 8 public and 2 private and 1 nonprofit participants FCPF Carbon Fund BioCarbon Fund Tranche 3 Financing for Sustainable Landscapes $70 million^ Donor governments pledging results based finance for blended climate and development impacts; Structure under development for private sector Support lowincome countries to benefit from carbon finance $75 million^ Donor governments aiming to sustain carbon market capacity and test results based finance frameworks OVERVIEW OF CARBON FINANCE VEHICLES ^Resources include pledged and signed readiness components; $17m for BioCF+ and $23m for Ci-Dev Readiness 18
Thank you