Download Francois Beaurain

Investing in PoAs
Dr. Francois Beaurain
7th CDM Joint Coordination Workshop
asset management
7th
Coordination
12 Joint
March
2011 Workshop
I
12 March 2011
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CDC Climat Asset Management
►
Asset management company incorporated in 2010
specialized in the carbon markets
►
100% subsidiary of CDC Climat and publicly-owned Caisse
des Depots (France)
►
Several active investment mandates focused on post-2012
credits and non-BRICs
►
Strong focus on long-term investments in high quality carbon
assets (CERs, ERUs, VERs)
7th Joint Coordination Workshop
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12 March 2011
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Why is CDC Climat AM looking at
PoA opportunities?
1.
PoAs are ideal for micro-activities
2.
They are currently many PoA leads in
Africa and LDCs
3.
Because once registered, PoA can
offer opportunities to make future
carbon revenues bankable
7th Joint Coordination Workshop
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Benefit 1: PoAs are ideal for
micro-activities
►
Absence of practical large-scale methodologies
targeting micro-activities (contrast with GS VER
meths, e.g. cookstoves).
► PoA is the only option to develop large-scale
programme using small-scale methodologies.

Over 50% of PoAs in validation cover household
sector (<<1% for stand-alone CDM projects)
From investor point of view, PoA is needed to
diversify our project portfolio.
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Benefit 2: PoAs can generate
opportunities to invest in Africa
►
After 2012, only CDM projects developed in LDCs will be
eligible in the EU-ETS
 19% of PoAs are in Africa (<3% for CDM projects)
PoAs can offer a means to source EU-ETS
eligible carbon credits.
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Benefit 3: Registered PoA could be a
safer and scalable investment
►Under
registered PoA
►Inclusion is faster than validation
►inclusion risk is lower than registration risk
 PoA is a vehicle where investments could be safer and scalable.
 Free of CDM validation/registration risks, CERs become more
bankable. CERs can be used for pre-payments.
From investor point of view, once registered PoA
could be safer and scalable investment.
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What are the most critical regulatory
barriers to investing in PoAs?
1.
DOE liability
2.
Unclear additionality guidance
3.
Timeline
7th Joint Coordination Workshop
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12 March 2011
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Obstacle 1: DOE liability
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►
DOE liability for erroneous inclusion is potentially unlimited
since it covers all issued CERs and large upward price risk
► We do not see how these risks can be credibly managed by
private entities

Difficulties to appoint a DOE for validation/verification for most
PoAs
 Can one invest in PoAs without gambling? Most PoAs are
currently financed thanks to donors!
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Obstacle 2: Unclear
additionality guidance
asset management
►
Absence of a clear guidance on additionality of PoAs and
existence of contradictory guidances
► Absence of “CDM prior consideration“ concept for PoAs
► Application of VSSC additionality guidance in the context of
PoAs?

It is currently almost impossible to assess additionality risks exante.
 Additionality rules should allow demonstration at PoA and CPA
level.
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Obstacle 3: CPA implementation
cannot start before PoA validation
asset management
Under PoA rules, there is no “CDM prior consideration“ but CPAs
cannot start before PoA validation start.
► PoA preparation has different time requirements than programme
implementation
►

PoA-DD preparation and/or DOE appointment can delay CPA
implementation. Some programmes are sometimes not eligible to
the CDM because of this rule.
 Proposed solution: “PoA start date“ concept needs to be
introduced. CPA cannot be implemented before PoA start date
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Other minor regulatory
obstacles
asset management
CDM
PoA
Sampling among CDM
projects is not allowed
Sampling among CPAs Economy of scale
is allowed but no
during verification are
guidance exists
impossible
Combination of
methodologies is
allowed
Combination of
methodologies is
limited and has to be
consistently applied to
all CPAs
PoA types are limited.
2 years limitation in
debundling rule
No time limitation for
debundling check
Unfair and
unmanageable
debundling check
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12 March 2011
Consequence
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PoA will be fully workable
when...
asset management
►
A time limit to DOE liability issue is introduced.
► Additionality for PoAs is clarified.
► PoA debundling rules, start date, VSSC guidance, combination of
methodologies and CDM prior consideration are the same as for
“normal“ CDM.
We want to invest in PoAs, but CDM regulatory
issues are complex – Gold Standard-PoA and VCS
grouped projects are strong competitors even in
absence of clear price formation mechanism.
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To go further...
asset management
7th Joint Coordination Workshop
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►
PoA Guidebook available on our
website:
http://www.cdcclimat.com/PoADevelopping-programs-of.html
►
Submissions from the PD forum
for call for inputs on PoAs
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Thank you!
asset management
For any other inquiries, do not hesitate to contact :
Dr.François Beaurain, [email protected]
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