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History and Objectives of the Prototype Carbon Fund

History and Objectives of the Prototype Carbon Fund. PCF Objectives. Show how CDM/JI contributes to sustainable development Provide UNFCCC Parties, private sector, and others a “learning-by-doing” opportunity in development of rules for achieving ERs under CDM and JI;

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History and Objectives of the Prototype Carbon Fund

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  1. History and Objectives of the Prototype Carbon Fund

  2. PCF Objectives • Show how CDM/JI contributes to sustainable development • Provide UNFCCC Parties, private sector, and others a “learning-by-doing” opportunity in development of rules for achieving ERs under CDM and JI; • Demonstrate public-private partnership for addressing global environmental problems through market-based mechanisms

  3. Features of the PCF • Closed-end Mutual Fund structure with diverse portfolio to: • Minimize Project Risks • Reduce Transactions Costs • Enhance the Learning Experience • Shareholding: Governments, $10 m; Companies, $5 m • Total Capital: US$145 million to be used in ~ 30 projects • PCF Products: • Competitively priced, high quality emissions reductions • target portfolio wide outcome price: ~$5/tCO2 ($20/tC) • target deal price: $2.5-3.5/tCO2 (~$9-12tC) • High value knowledge asset: create competitive advantage for corporate investors and efficient market regulation and leverage for sustainable development for Parties

  4. Key Demonstration Effects … that investments under CDM/JI can: • Earn export revenue for Developing Countries/Transition Economies engaging in the new ER commodity trade • Increase the profitability of cleaner more efficient technology in energy, industry, and transport sectors • Contribute to sustainable development … and how private sector and governments can implement the CDM/JI project cycle and compete in emerging carbon market

  5. PCF Subscribers ($145 million) Public Sector(6) Governments of Netherlands, Finland, Sweden, Norway, Canada, and Japan Bank for International Cooperation Private Sector: (17) RWE - Germany, Gaz de France, Tokyo Electric Power, Deutsche Bank, Chubu Electric, Chugoku Electric, Kyushu Electric, Shikoku Electric, Tohoku Electric, Mitsui, Mitsubishi, Electrabel, NorskHydro- Norway, Statoil -Norway, BP-Amoco, Fortum, RaboBank, NL

  6. Host Country CommitteeMembers Joined/Signed MOUs Joining through endorsing Projects • Togo • Zimbabwe • Uganda • Morocco • Nicaragua • Honduras • Peru • Senegal • Burkina Faso • India • Poland • Swaziland • Kazakhastan • Latvia • CzechRepub. • Argentina • CostaRica • Guatemala • Brazil • Mexico • El Salvador • Guyana • Uruguay • Hungary • Colombia • Belarus • Bulgaria • Chile • Kenya • Romania • Thailand

  7. PCF Status and Focus Deal flow far exceeds funding - several carbon contracts now under negotiation • >50 deals with $350m+ carbon purchases under review • Targeting signed Emissions Reductions Purchase Agreements (ERPAs) • by end 2001 15 deals of $45-50mm in Chile, Costa Rica, Nicaragua, Brazil, India, Uganda, Romania, Morocco • by July 2002~$35mm in Guatemala, Argentina, Honduras, Thailand, El Salvador, Belarus, Nicaragua, Czech; • Under review or on hold for FY02 ~$40mm: China, Kazakhastan, Belarus, Guyana, Hungary, Poland • Constraints: FMU and country capacity, quality of asset

  8. PCF’s Plans for ER Purchases: July 01-June 02 Total = $118 million, Eastern Europe: $41 million

  9. Indicative PCF Portfolio in EIT/CIS

  10. High Learning Value in StreamliningTransaction Costs • Demonstrating sectoral or multi-project baseline, bulk validation and verification and certification to lower transaction costs of deliveirng carbon finance • Hungarian projects through Dexia-Fondalec for manufacturing plant heat recovery/cogeneration • Poland: several small-scale district heating coal to geothermal/biomass fuel plants • Czech: very small scale large volume energy efficiency measures e.g. building insulation, lighting, metering

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