operaciones en esquemas voluntarios de reducción de emisiones

Carbon Markets and Emission Reductions Voluntary Carbon MarketGrattan MacGiffin, Head of Voluntary Carbon Marketsvoluntarycarbon@mfglobal.com

EOI, MadridFebruary 2nd, 2010

About MF Global

1

Benefits of working with us

• Global distribution network, providing primary access to 70+ exchanges around the world

• Diversified and balanced business with solid balance sheet and strong growth

• Independent, predominantly agency model – focus is on providing the best execution, clearing and settlement services rather than taking positions on market direction

• Track record in risk; philosophy is to take measured risk and mitigate unexpected risk

MF Global (NYSE: MF) is a leading intermediary offering customized solutions in global cash and derivatives markets. We provide execution and clearing services for exchange-traded and over-the-counter derivative products as well as for non-derivative foreign exchange products and securities in the cash market. MF Global operates in 14 countries on more than 70 exchanges, providing access to some of the largest financial markets in the world and is the leader by volume on many of these markets.

2

Countries with offices and introducing broker (IB) relationships

Global Focus

• Operating in 14 countries

• 3,200+ employees

• 70+ Exchange affiliations

Diversified Global Presence

Our businesses are strategically aligned to optimize our clients’ access to our extensive array of products and our expansive global network.

MF Global has five strong institutional product lines and a retail clients division:

Countries with IB relationships

Global Product Focus

EOI - Carbon Markets

• Introduction

• Transacting VERs

• Retirement

• Facts and figures

• VER pricing

• Operating in the Voluntary Carbon Market

• VCM vs Regulated emissions

• The future

• Questions

Definition

• “In a voluntary carbon market, an entity (company, individual, or another ‘emitter’) volunteers to offset its carbon emissions by purchasing carbonallowances from a third party, who then takes this money and uses it towards a project that will reduce carbon in the atmosphere.”

• Alison Wise, National Renewable Energy Lab

Transacting VERs

Issues in dealing VERs

> Not commoditised

> No guarantees

> Interference from external agencies e.g. UN, DOEs

> Beauty in the eye of the beholder

> Changing fashions

> Legislative uncertainty

> Occasional bad press

= HARD WORK!

Typical deal counterparties

A typical example…

1 Project Developers e.g. Indian Wind project

2 Aggregators e.g. E&Y

3 Marketed e.g. Brokers

4 Buyer e.g. Retail Offset Provider

5 Corporate end-user

Other scenarios include:

> Seller – Buyer direct e.g. tender by large corporate

> Auctions – mixed success

+ Market speculators

Tips

• SELLERs

• Select standard carefully

• Understand what is selling

• Compile all paperwork

• Consider sale size/vintages

• Commit to sell

• Speak to experts

• Don’t cut corners

• Be realistic!

• Aim for repeat business

• BUYERs

• Assess carefully what you need

• Understand what is available

• Progress VERPA quickly

• Buy only what you need

• Commit to buy

• Speak to experts

• Accept unforeseen delays

• Be realistic!

• Aim for repeat business

Retiring VERs – an example

1 Seller submits project docs

2 Registry checks and verifies docs

3 Registry issues VCUs to Seller (logs details in VCSA registry)

4 Seller transfers VCUs to Buyer’s Holding account

5 Buyer transfers VCUs into their Retirement account

…Less than 10% of issued VERs are actually ‘retired’

North American 2009 OTC market by type

Source: New Energy Finance

Source: New Energy Finance Notes: Incl. VCI data from Jan-Aug, CCX OTC data, Aug - 18 Sept, and ACR transaction data

50%

19%

13%

6%5%

8%

3%1%LFG

Forestry

EOR

Livestock

ACR mixed/ not specified

CCX mixed / not specif ied

Ag soil

CMM

Total = 7.5Mt

International 2009 OTC market by type

Source: New Energy Finance

27%

25%22%

12%

11%

2%1%Fuel-switching

Industrial Gas

Wind

Run of River

Energy Efficiency

RE not specified

Methane

Total =1.0Mt

Source: New Energy Finance Notes: Incl. VCI data from Jan-Aug, CCX OTC data, Aug - 18 Sept, and ACR transaction data

Project type by standard

Source: New Energy Finance

Sectors

Standards Electrici ty Industry Transportation Agriculture Forestry Commerc ial /

Residential

C AR l ivestock CH4

m anure managem ent

reforesta tion , conservation based forest managem ent

land fill CH4

RGGI fugitive SF6 from transm ission livestock CH4 afforestation landfill CH4, e fficiency

VCS renewables, CH P, ef ficiency, SF6

process emissions, indust rial gases,

efficiency

fuel-switching, effic iency

livestock CH4, soil/crop practices

N2O

all LULUCF categories, avo ided

deforesta tion Ef fic iency

Gold Standard renewables, CHP efficiency fuel-switching, effic iency

e ffic iency, fertil iser N2O, l ivestock CH4,

biomass residue

ef ficiency, landfill CH4,

wastewater CH4

VER+ CDM-app roved CDM-approved CDM -approved C DM-approved CDM-app roved CDM-app roved

CCB A /R, ag ro -forest ry,

avoided deforesta tion

C CX renewable coal-mine methane,

efficiency, fuel-switching

fuel-switching, effic iency

agricu ltu ra l CH 4, soil/crop practices

N2O, o rganic waste disposal

A/R, IFM, and fo rest en richmen t

ef fic iency, fuel-switching

ACR renewable fuel switching, efficiency

fue l switch ing , effic iency

m anure managemen t

A /R,

REDD land fill CH4

North American 2009 OTC market by standard

Source: New Energy Finance

Source: New Energy Finance Notes: Incl. VCI data from Jan-Aug, CCX OTC data, Aug - 18 Sept, and ACR transaction data

49%

23%

16%

7%4%1%

CAR

ACR

CCX

CCB

VCS

None

Total = 7.5Mt

International 2009 OTC market by standard

Source: New Energy Finance

70%

26%

2%VCS

Social Carbon + VCS

Gold Standard

VER+

CCX

Total = 1.0Mt

Source: New Energy Finance Notes: Incl. VCI data from Jan-Aug, CCX OTC data, Aug - 18 Sept, and ACR transaction data

Historical/ projected voluntary market transaction volumes

Source: New Energy Finance

9 15

43 54

1

10

23

69

3 147

3 1

31 1 3

14

0

2 0

4 0

6 0

8 0

100

120

140

20 05 200 6 2007 2008 20 09 (conservative)

2009 (o ptimistic)

C C X (h istorical )

OTC (h istorical )

123 Mt

66 Mt

25 Mt

11Mt

69Mt

8 8Mt

OT C vo lum e 2008

R em ain in g vo lu m e exp ected

C C X tra ded vo lu m e

123 Mt

66 Mt

25 Mt

11Mt

69Mt

8 8Mt

OT C vo lum e 2008

R em ain in g vo lu m e exp ected

C C X tra ded vo lu m e

Source: New Energy Finance, Ecosystem Marketplace. Notes: 1) projections for 2009 volume include an assumption for the OTC market size that the VCI captures 1/3 of the global voluntary market, in line with our annual study “State of the Voluntary Carbon Market”

MtCO2e/yr

Pricing

Historical prices and volumes on the CCX

Source: New Energy Finance

US$/tCO2e 

0

5

10

15

20

25

30

0

1

2

3

4

5

6

7

Q4 03

Q1 04

Q2 04

Q3 04

Q4 04

Q1 05

Q2 05

Q3 05

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Q3 09

Volume Prices

OTC Wholesale prices by standard

9.8

7.0 6.8

3.0

1.4

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Gold Standard Other (CCB, Social Carbon,

others...)

CCAR VCS CCX

Attracting business

VER pricing sample

source: MF Global, CCX

-480.820.43CFI OTC

-330.150.1CFI on exchange

no changeno change7CRT

-7€ 7€ 6.50Gold Standard

-452.751.5VCS Industrial

2056VCS Premium

% changePrice last issue2009 vintaget CO2e

VER prices - December 4

Carbon Finance, Dec 2009-Jan 2010, Volume 7, Issue 1

21

Marketing

Voluntary Carbon Market vs Regulated Emissions

Source: “State of the Voluntary Carbon Markets 2009”, Ecosystem Marketplace and NCF

MarketsVolume (MtCO2e) Value (US$ million)

2007 2008 2007 2008

Voluntary OTC 43.1 54.2 262.9 396.7

CCX 22.9 69.2 72.4 306.7

Other exchanges 0 0.2 0 1.3

Total Voluntary Markets 66.0 (2.2%) 123.4 (2.9%) 335.3 (0.5%) 704.8 (0.6%)

EU ETS 2,061.0 2,982.0 50,097.0 94,971.7

Primary CDM 551.0 400.3 7,426.0 6,118.2

Secondary CDM 240.0 622.4 5,451.0 15,584.5

Joint Implementation 41.0 8.0 499.0 2,339.8

Kyoto [AAU] 0.0 16.0 0.0 177.1

New South W ales 25.0 30.6 224.0 151.9

RGGI - 27.4 - 108.9

Alberta’s SGER(a) 1.5 3.3 13.7 31.3

Total Regulated Markets 2,919.5 4,090.0 63,710.7 119,483.4

Total Global Markets 2,985.5 4,213.4 64,046.0 120,189.0

Transaction volumes and values, globally 2007-08

The future

Likely scenarios

• Bounce back to upward growth trend in global VCM

• Continued evolution of standards and market transparency

• US legislation (sometime!)

• The rise of REDD

• Innovator of new project methodologies

• More forward trading as market matures

• CCX OTC growth

• US offsets to dominate growth

• Big driver of “green tech” industries

Contacts

Gracias!

voluntarycarbon@mfglobal.com

Grattan MacGiffin : +44 . 20. 7144 5784

gmacgiffin@mfglobal.com