A French view of the shaping of a National Registry for GHG Allowance trading Presentation to The Registries Workshop prior to SBSTA 16 by Philippe Meunier MIES and Heneage Legge-Bourke CDC IXIS Bonn, June 2nd - 3rd 2002

Summary The requirements of the French Regulator –Kyoto compatibility –Reliability –Security –A dynamic tool for applying national policy How CDC responded to the challenge –The requirements –The options –Some solutions –The consequences The model for a French National Registry

First section: The Regulator’s requirements

The Regulator’s requirements - n° 1 - Kyoto Respect the terms of the Kyoto Protocol and the Marrakech Accords in every respect which means creating a National Registry which: –records allocations –records transfers –links with other national registries –links to the UNFCCC/CDM transaction logs –allows direct accessibility for participants –enables compliance (including CPR) –allows selected access by the public

The Regulator’s requirements-n°2- Reliability Be certain that: the information held is accurate and correctly reflects the true position before and after transfers real time information is available all-the-time rigorous respect is maintained of all limitations (e.g. commitment period reserve)

The Regulator’s requirements - n°3 - Security Ensure that information is securely held and that access to information is only available to those for which it is intended

The Regulator’s requirements - n° 4 - A dynamic tool for applying national policy A Registry to provide information: on a single site which reconciles holdings of allowances and verified emissions which enables application of penalties/banking which enables decision-taking on policy implementation

Première partie : Faisabilité du registre avec les outils de EEF Second section: CDC’s response

CDC ’s response - the requirements Caisse des dépôts et consignations («CDC») as a 100% state- owned, ‘ AAA’-rated ‘public establishment’, has a mission to act in the public interest Approach to the challenge as a financial institution, conscious of its mission, conservative in its approach, attentive to the requirements of the French Authorities, the Kyoto Protocol and the proposed European Directive Compatibility with other systems - so need to look at what others were doing

10 1. Issuance and allocation of quotas 1.1. Initial issuance of AAUs 1.2 Adjustments to initial volumes of AAUs 1.3 Issuance of ERUs 1.4 Allocation of allowances to participants 2. Managing the registry’s accounts 2.1 Creation of national accounts 2.2 Validation of participants’ details 2.3 Creation of participants’ accounts 2.4 Modification of account balances 2.5 Closing of participants’ accounts 3. Transfer of allowances 3.1 Registration and verification of transfer requests 3.2 Execution of national transfers 3.3 International validation 3.4 Execution of international transfers 4. Compliance analysis 4.1 Receiving information/registration of physical emissions 4.2 Elaboration of participants’ compliance balance 4.3 Confrontation of physical emissions/allowances held by participants 4.4 Elaboration of country’s compliance balance 4.5 Confrontation physical emissions/quotas for the country 5. Making information available 5.1 … to the public 5.2 … to a participant 5.3 … to the Regulator PricewaterhouseCoopers / Natsource

CDC ’s response - the options Irrespective of their legal definition, t reat allowances like financial securities or treat them as something « different » New build or adapt existing systems - can they cope with the requirements?

CDC ’s response - the solutions Treat allowances like public or private financial instruments (whatever the legal definition) Handle transfers on an existing secured electronic financial securities registry i.e. bottom-up approach - no new build from scratch PwC audit - Existing secured electronic financial securities registry systems can cope with minimal adaptation Double-entry book-keeping Inter-communicability between registries already exists

CDC’s response - the consequences Satisfies the requirements - fit for purpose Reliable and complete information Secure access is possible at differing levels Systems can communicate with others Saves time Saves money

Première partie : Faisabilité du registre avec les outils de EEF Third part : Model of a Registry

Mоделmodelomodellмакетdemonstrationmod elmOdelodemonstratiemodelmodellмакетmo delomoDellmodelmallimaquettemodelмодел modellmodEldemonstratiemaquettemodelode monstrationmodeLlmodeloмоделmodelldemo nstrationmallimaquettedemonstratiemodelmo delomodellмакетmodeldemonstrationmodell maquettemodelDemonstratiemodellmodeloма кетmodeldEmonstrationmodelldemonstratiem odeloModelmodelldemonstrationmodelmodel mOdellмакетdemonstratiemodelmaquettemod elмоделdemonstrationmaquettemallidemonstr atiemodelodemonstrationmodelmodeloмакет

Interactive presentation of the model of the Registry

18 Contacts –MIES –CDC