1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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