Alexandre Kossoy Philippe Ambrosi

Overall Market showed resilience (in Billion US$) 144 135 65 31 11 0.7 2

Allowances up, offsets down (in Billion US$) +1000% Assigned Amount Units RGGI JI 2.0 2.2 .35 EU ETS Allowances 118.5 -33% +626% CDM Secondary CDM 2.7 17.5 +18% -59% Chicago Climate Exchange .05 Voluntary .12 New South Wales Certificates .34

EU ETS: mainstreamed in the EU EUA, secondary CER & primary CER prices (€ per tCO2e, strip) Long Phase II with lower industrial activities; (-11% emissions in 2009) EUA sell-off raises cash in credit-tight environment Haunted by challenges, swift response EUAs sCERs pCERs 4

CDM & JI Market Value Halved volume (MtCO2e) price (US$/tCO2e) Activity declined markedly reduced compliance needs less origination by intermediaries competition with AAUs uncertainty on post-2012 rules Price declined too, but did not collapse interest in sound and viable projects How long will CDM & JI continue to catalyze low-carbon investment? 5

CDM & JI Buyers 2009 6

Who’s selling ? 2009 (share of volumes) 7

CDM Sectors 2009 8

Contracted (risk- adjusted) Low Residual Demand 2012 demand down 25% to 1.22 billion tCO2e 1.18 billion tCO2e contracted 1.02 billion CERs & ERUs contracted (risk-adjusted) 163 million AAUs contracted Not all have purchased what they need: residual demand of 230 MtCO2e Large post-2012 headroom under EU Package (and other initiatives)… 2,127 MtCO2e AAU 230 MtCO2e, mostly from EU governments 1,181 MtCO2e 1,222 MtCO2e CDM & JI AAU CDM & JI Contracted (nominal) Contracted (risk- adjusted) KM Demand 2008-12 9

Navigating a bottom-up, fragmented carbon market After E. Fages, 2010 Stop-gap solution while international negotiations do not pick up Powerful, bottom-up drive leading to broader local acceptance and participation Low liquidity and inefficiencies without fungibility across regimes Long maturity time with large capacity needs

Full report available at www.carbonfinance.org Thank you Full report available at www.carbonfinance.org