PAF: Lessons Learned and Announcement!

PAF logo FINAL_0

The World Bank’s Pilot Auction Facility for Methane and Climate Change Mitigation held a side event on the margins of COP21 this past weekend to announce its second auction, and to discuss lessons learned from the first pilot auction held last July.

First things first: the PAF announced its second auction, to be held in the second quarter of 2016 and open to the voluntary market. Like the first auction, the second auction will target methane emissions from landfills, agriculture and wastewater sites – but will change its format to be a forward auction. That means the strike price will be fixed prior to the auction, and the premium will be bid on by auction participants. Please see PAF’s eligibility criteria page. The auction budget, application package, registration deadline, deposit information, and auction date will be announced on the PAF website early next year.  Please register for PAF’s 17 December webinar (09:00 EST / 14:00 GMT) if you are interested in participating in the second auction.

In addition to announcing the second auction, the World Bank shared its lessons learned from the first auction that was held in July. These lessons were categorized into the following five broad categories:

  • Auction design
  • Project eligibility
  • Marketing is critical
  • Focus on risk management
  • Bonds offer an inexpensive and accessible put option delivery mechanism

The entire lessons learned report is available here. Winners of the first auction took ownership of the put options on 7 October.

In related news, the World Bank is also considering whether to extend the PAF to other sectors and greenhouse gas types – in particular, the oil and gas sector (see study here).

GMI continues to support the PAF process – stay tuned here for updates!

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