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Online CER Auctions
An interesting, innovative initiative which provides further liquidity to the CDM market, is the ACX-Climex forward CER
auction, organised since 25 November of last year. This initiative has been developed by the Asia Carbon Exchange (ACX-Change1
) and New Values (Climex2) and provides transparent price setting through auctioning forward CERs. For this purpose,
auctions are being organised by linking EU ETS- capped companies (demand) with CDM project developers (supply) in Asia.
Ms Sascha Bloemhoff, CER auctions manager with New Values, explains how the initiative came about: "Through Climex,
knowledge and technology was accumulated anyhow and combining this with the expertise of the Asia Carbon Group in CDM project development, this cooperation
seemed logical to pursue with the ACX-Climex Exchange as a result."
In principle, auctions are being organised on a monthly basis. However, the March 2006 auction was put on hold. Ms Bloemhoff explains: "Additional due
diligence was needed to certify the quality that we want to deliver." The third auction (13 January of this year)
saw 890,000 CERs change hands at prices ranging from €6.20 to €9.20 per CER, which is considerably higher than the price
range at which vintages were auctioned at the first auction (ranging from €3.71 to 6.25/tCO2-eq.; 130,000 CERs in total with 8
transactions) and the 16 December of last year auction (size: 610,000 CERs).
According to Ms Bloemhoff, participants may have been a bit hesitant in the beginning, "but interested parties seem to acknowledge the advantages of such a
trading scheme as a cost effective and transparent distribution channel." As said before, the ACX-Climex initiative focuses
on the Asian region and the projects on offer during the first two auctions all originated from India. The fouth 'Kyoto
anniversary' auction, held on 16 February of this year, also had vintages on sale from Vietnam.
Ms Bloemhoff elaborates on the auction procedures: "Price, quantity, buyer, seller, and vintages of different projects are
predetermined and agreed upon during the process. The auction starts with a standing price, i.e. the seller gives the minimal price
at which it is obligatory to sell. Although sellers have been rather optimistic in giving high standing prices, successful sales were
concluded in between €5 and €10/CER and only one project was actually sold at the standing price for a particular vintage.
After concluding a 'deal' the buyer has the exclusive right to negotiate an ERPA for a period of 60 days. For this purpose a
standard basic ERPA has been designed and only needs to be changed in case of parties' specific requirements. Moreover, a buyer
obtains the first right of refusal (for the remaining CERs, if any) in case all vintages of one particular project have been
bought."
Taking part in the auction is not in any way restricted, but participants have to register with ACX-Change or New Values in advance. Registration is free of charge
although it is foreseen that a fee may be charged in the future. Only when the standing price is being offered and an
ERPA has been successfully negotiated, a transaction fee has to be paid of 1% and 0.75% respectively by both the buyer and
the seller. Basic due diligence will be applied to submitted projects and the PDD has to be publicly available as it is
published for consultation purposes during the auction. According to Ms Bloemhoff, potential buyers merely need a holding
account with their respective national registries in order to take part in the auctions.
CERs are no commodity yet and this is reflected in the system's interface as projects and related vintages on sale are
accompanied by their PDDs. This allows potential buyers to screen projects on their contribution towards sustainable
development. Besides, projects are subdivided into vintages. Ms Bloemhoff: "As such, by offering revenues from future
credits, project developers could finance later stages of project implementation. ACX-Climex thus provides an excellent
financing mechanism for such cases where additional financial means are necessary to actually implement the project. Buyers, on
the other hand, seem to favour such an approach for risk diversion purposes."
ACX-Change and Climex strive to further improve the platform and auction procedures. For example, bidding for
complete projects next to vintages has been made possible since February of this year and JI projects are foreseen to be included
in the near future as well. Moreover, as more experience is gained throughout the process, ERPAs might be further
standardised, so transactions costs could be further reduced.
For further details, please contact:
Ms Sascha Bloemhoff - auctions manager
New Values (ACX-Climex)
Strawinskylaan 729
1077 XX Amsterdam
the Netherlands
tel.: +31 30 291 9940
e-mail: sascha.bloemhoff@newvalues.net
Internet: www.newvalues.net
1 The ACX-Change is a member of The Asia Carbon Group. The ACX-Change is designed as the carbon asset management arm of the group and was first launched at Carbon Expo 2005 in Cologne in May.
2 New Values is owned by Dutch bank Rabobank (50%) and Dutch Transmission System
Operator Tennet (50%). Climex, launched by New Values and operational since June 2005, is part of a wider European initiative: Climex-alliance. This alliance provides local knowledge; the Netherlands,
Belgium and Germany are served by Climex, most notably with respect to spot market trade of EU emission allowances (EUAs).
Interviews in JIQ Issue December 2005
Ms Iemy Brand on ERUPT New Style
Interviews in JIQ Issue October 2005
Mr Ash Sharma on the Testing Ground Facility
Interviews in JIQ Issue July 2005
Ms Tine Heyse on the first Belgian JI/CDM Tender Programme
Interviews in JIQ Issue April 2005
Mr Nikolaus Müllebner on the Austrian JI/CDM Tender Programme
Interviews in JIQ Issue October 2004
Ms Ulla Blatt Bendtsen on the Danish - Russian cooperation
Mr Sünnen on the KfW Carbon Facility
Interviews in previous JIQ Issues
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