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World Bank sets out criteria for methane-cutting CER auctions

April 2015 - The World Bank’s Pilot Auction Facility for Methane and Climate Change Mitigation (PAF) will support projects at risk by purchasing CERs and then setting them aside. The CERs will be bought at a guaranteed minimum price. This will come in the form of put options offered in competitive auctions. Germany, Switzerland, Sweden and the US have collectively pledged some USD 53 million to the PAF to date.

The first competitive auction will be held in June, offering USD 25 million in puts. The auction will focus primarily on waste management projects in which significant quantities of methane are released. During the auction, put options will be offered at a guaranteed fixed purchase price for a single tranche comprising 2,000 CERs. The winners must pay a small charge of USD 0.30 per CER, but then have the right to sell those CERS to the PAF according to a specific schedule over the next five years and at the price attained at the auction.

The World Bank has announced the criteria to be applied in selecting projects and programmes for its CER auctions:

  • The certificates must not be subject to a purchase agreement with a third-party
  • The certificates must originate from a project or PoA that uses at least one of the CDM methodologies contained in a predefined list drawn up by the World Bank. The list currently comprises 35 methane-avoidance methodologies
  • The CERs must originate from a project or PoA conducted in an eligible host country. The list of eligible countries takes in all key CDM host countries and all LDCs. The main exception is China, whose statutory minimum price for CERs is not compatible with PAF modalities
  • To ensure that PAF-funded climate change activities actually continue, CERs are allowed which were issued after the auction and originate from projects whose last monitoring period did not begin before 15 September 2014
  • Projects must meet specific, DOE-verified environmental, health and safety, and integrity criteria

More information about the selection criteria, including the list of eligible countries and CDM methodologies, is available on the PAF website. Details of the auctioning procedures will be publishing on the website shortly and an interactive Q&A webinar will be held on April 8.

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