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APEx 2005 Annual Conference Disney’s BoardWalk Inn, Florida. CO 2 Torger Lien President & CEO, Nord Pool ASA. Kyoto protokoll ETS and EUA quota system. Diff. reductions. ETS Reductions. ETS reductions. Other. Carbon credits CERs (CDM) ERUs (JI). ETS sectorer. Emissions 1990.

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APEx 2005 Annual Conference Disney’s BoardWalk Inn, Florida

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Apex 2005 annual conference disney s boardwalk inn florida

APEx 2005 Annual ConferenceDisney’s BoardWalk Inn, Florida

CO 2

Torger Lien

President & CEO, Nord Pool ASA


Kyoto protokoll ets and eua quota system

Kyoto protokollETS and EUA quota system


Apex 2005 annual conference disney s boardwalk inn florida

Diff. reductions

ETS Reductions

ETS reductions

Other

Carbon credits

CERs (CDM) ERUs (JI)

ETS sectorer

Emissions 1990

Emissions 2008-2012

EUs Kyoto obligation

Kyoto gap


Apex 2005 annual conference disney s boardwalk inn florida

Ways to close the Kyoto gap

  • Domestic policies & measures:

  • Taxes

  • Financial support

  • “command-and-control”

  • Negotiated agreements

  • Own abatement

Non-ETS measures

(domestic)

Own abatement

Governments decide how to share the burden. Ultimately Kyoto commitment rests with governments

ETS

  • Imports:

  • EU allowances (EUAs)

  • Credits from developing countries (CERs)

  • Credits from Russia/Ukraine ((ERUs)

  • “ Kyoto units” – Assigned amount units

Residual:

Government purchases


Allocation to individual installations

Kyoto AAUs (assigned amount units)

Trinn 1

Husholdninger,

Tjenesteyting,

Mindre industri

ETS

Transport

Trinn 2

Metall

Kraft

Varme

Mineraler

Treforedling

Trinn 3

Instal. 1

Instal. 2

Instal. 3

Instal. 4

Trinn 4

Allocation to individual installations


Gap ets sector 2005 2007

“Gap” ETS sector 2005-2007

BaU EU 25

60

Mil ton CO2

EU 1O (New)

50

CDM

40

Weather

Economical growth

Energy prices

30

EU 15

Reductions ETS sector

20

10


Gap ets sector 2008 2012

“Gap” ETS sector 2008-2012

Import of credits

250

200

Import of credits:CDM/JI or ETS-sector reductions

150

EU 25

100

Competition over CDM/JI credits: Public fund, buyers outside Europe

50

Reductions ETS sector

Supply

Demand


Marginalcost powergeneration continental europe

Marginalcost powergeneration -Continental Europe

Carbon price

€16/ton

Carbon price

€16/ton

Gas price

$5.75/mmbtu

Coalprice

$64/ton

Coal

Gas


Coalprice gasprice carbonprice

Coalprice, gasprice & carbonprice

Carbon price (€/tonn)

30

25

20

15

10

5

Gasprice/Coalprice

UK

May 2005

E Continent

May 2005

E Continent

May 2004


Fuelcost gas coal

Fuelcost, gas & coal


Trading eu allowances at nord pool t o start in 2005

Trading EU Allowances at Nord PoolTo start in 2005

  • Forward contracts – physical delivered

    • Ticker code: EUA (1 EUA = 1 tCO2)

    • Min. lot: 1000 EUA

    • Starting with three contracts:

      • EUADEC-05 (last trading day 1st Thursday in December 2005)

      • EUADEC-06 (last trading day 1st Thursday in December 2006)

      • EUADEC-07 (last trading day 1st Thursday in December 2007)

    • Closing price set every day

  • Use existing infrastructure; PowerCLICK ETS, Clearing Desk Application, SECUR clearing system etc

  • Link to national registries for transition of EUA

  • EUA spot contract


Volumes compared

Volumes compared

Open interst

NP: 10249

ECX: 13174


Carbon dioxide price impact on electricity prices

Elastic consumption

Load variation and price structure

Fuel exchange

Hydropower

Bottlenecks

No thermal power

Carbon dioxide price impact on electricity prices

100%

0%


Production cost avg coal fired power generation

Production cost avg. coal fired power generation

Marginal carboncost:

13,7 øre/kWh


Co2 cost impact the european model

100 %

80 %

60 %

40 %

Nordel

20 %

Germany

0 %

10

20

30

40

50

60

EUR/tonne

CO2 cost impact – the European model

Definition:

Price rise/cost escalation for coal

  • Today’s fuel prices

  • The cost effect in Germany is higher than in the Nordic region

  • Today’s carbon dixoide price yield about 45% effect in the Nordic region


Actual forward and carbon dioxide prices 2007

35

45

43

30

41

25

39

37

20

EUR/tonne

EUR/MWh

35

15

33

31

10

29

5

27

0

25

February 05

March 05

April 05

May 05

June 05

July 05

August 05

Carbon

2007 Germany

2007 Nordel

Actual forward and carbon dioxide prices, 2007

  • Strong correlation beetween forward and carbon dioxide prices

    • Even stronger correlation between Nord Pool and EEX power prices


Eua ets sustainability

EUA/ETS sustainability

  • Higher power prices to household consumers

  • Globally competitive base industry will suffer

  • EUA price formation fundamental or speculative

  • Will the consept reduce CO2 emissions globally

  • 2005-2007 is the test period. What will be the conditions for 2008-2012 period, and what will happen after 2012

  • For how long will European poleticians be the frontiers on the account of european base industry flagging out…or will the rest of the world follow their brave initiative?


Www nordpool com

For more information:

www.nordpool.com


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