Supported by EBRD Carbon Project and Asset Development Facility EBRD Shareholder Special Fund European Union Effort Sharing with a Green Investment Scheme (ESR-GIS): Side-event at COP24 Kommunalkredit Public Consulting / Climate Strategy Institute 2050 István Bart Katowice, December 12nd, 2018

Project recap ESR–GIS contribute to the AEA market development and facilitate the uptake by the EU Member States Developing a set of voluntary guidelines to support decision making in MS Decision-making guideline Pricing guideline Contracting guideline Monitoring guideline Setting up a Member State expert advisory group for facilitative dialogue Dissemination of results Current stage: First guideline drafts are nearing completion

Decision Making GL Overview Target audience: Member State officials considering AEA transfers and/or GIS A conceptual framework for considering trading Why different from Kyoto GIS (number of players, supply situation) The advantages and risks of trading for sellers and buyers A how-to-guide to buying and selling – strategy and management of trading Possible deal structures, (with or without the involvement of IFIs) Greening options and greening design choices Price transparency discussion

Step 7. Communicate with public Review and update strategy regularly Purchasing AEAs in six steps Step 1. Set your volume and budget your AEA forecast and total required volume Step 0. Have legal framework and admin structure Decide who prepares deals and who needs to approve them Set up policy on price transparency Step 2. Develop purchasing strategy when to buy and how much to buy (trading timeline) + maximum price what greening to require Step 3. Find a seller Auction/Tender (directly or through intermediary) Bilateral contacts (directly or through intermediary) Step 4. Negotiate a deal Forward or spot deal, payment and delivery terms, price Decide on greening and monitoring provisions, handle risks Step 5. Delivery and Payment of AEAs Step 7. Communicate with public Review and update strategy regularly Step 6. Monitor greening

Step 7. Communicate with public Review and update strategy regularly Selling AEAs in six steps Step 1. Set price floor and sellable volume ESR forecast and total volume required for domestic compliance Setting price floors and sellable volumes Step 0. Have legal framework and admin structure Decide who prepares deals and who needs to approve them Set up policy on price transparency Step 2. Develop trading strategy When to sell and how much to sell (trading timeline) Decide what greening to offer Step 3. Engage with buyers Auction/Tender (directly or through intermediary) Bilateral contacts (directly or through intermediary) Step 4. Negotiate a deal Forward or spot deal, payment and delivery terms, price Decide on greening and monitoring provisions, handle risks Step 5. Deliver and receive payment for AEAs Step 7. Communicate with public Review and update strategy regularly Step 6. Monitor greening

Pricing GL Aim: Content of the GL: Status of the GL: increased understanding of pricing mechanisms in potential ESR trades Content of the GL: Supply and demand of AEA Transparency and compliance Mechanisms for price setting Negotiated pricing Market approaches Status of the GL: First internal draft of GL

Contracting GL Aim: Content of the GL: Status of the GL: supporting MS to conclude potential ESR trades / provision of contractual elements Content of the GL: Key concepts of AEA model agreements Legal nature of transactions of AEAs AEA contract types Contractual elements AEA Model Agreement Status of the GL: First internal draft of GL

Monitoring GL Aim: Content of the GL: Status of the GL: options and modalities for the monitoring, reporting and verification (MRV) of emission reductions and climate-related spending of ESR transaction revenues Content of the GL: Approaches to monitoring and their greening implications Causality and additionality Standard types of monitoring approaches / types of greening Costs of monitoring & verification MRV templates Status of the GL: First internal draft of GL

Project Results increased understanding of and potential for ESR trade model terms and conditions for transactions in AEAs an expert platform for coordinating the development and evolution of these terms basis for future coordination, evolution and elaboration of such transactions