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UCD Emissions Trading Workshop

UCD Emissions Trading Workshop. “Enterprise Perspective”. 25 th April 2012. Policy And Politics. Energy Efficiency. Services*. Useful Energy. Fossil Fuels. CO2. Climate. RES. Nuclear. Everything Else. Energy Policy (mainly National). Climate Policy (mainly EU).

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UCD Emissions Trading Workshop

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  1. UCD Emissions Trading Workshop “Enterprise Perspective” 25th April 2012

  2. Policy And Politics Energy Efficiency Services* Useful Energy Fossil Fuels CO2 Climate RES Nuclear Everything Else Energy Policy (mainly National) Climate Policy (mainly EU) * Mobility, Heating/Cooling, Electrical/ICT etc.

  3. Long-term Carbon Price Formulation Slow energy efficiency uptake Early RES, nuclear build Higher 2020/30 cap “PRIMES” output: Assumes global CO2 market link € Delayed CCS build Higher GDP growth More rapid technology Development curve Regulatory risk Theoretical price evolution response (closed system)……….

  4. Background • Views are primarily ESI (~70% of ETS) • Enterprise does not have common view • Traders vs. compliance operators vs. exposed sectors • EU Electricity Supply Industry • Accepts science • Committed (2009) to decarbonisation by 2050 (ESB 2035) • Promoted ET concept to EU policy-makers (vs. tax) • Informal Environment Council (17th April) • Carbon market is bust, needs to be fixed

  5. A Broken Market? • ETS basic concept: • Binding cap to reduce emissions; • Cost efficiency through trading within cap • Discovered carbon price informs operational and investment decisions • Divergent views on current low price • By Country, by sector, by company strategy • But… cap not breached, price reflects the supply (fixed cap): demand balance • And.… future investments not determined by price alone (trajectory to zero, extreme penalties) • However…. Cion responded to political pressure • Something will be done (by December 2012)!!!

  6. Recession Reduction Target (Mt) @ marginal price of €x/t x x1 €/t 0 Post Pre Recession Quantum to be Abated (Mt)

  7. Policy coherence (lack of …) Reduction Target (Mt) @ marginal price of €x/t x €/t 0 Reduction Target (Mt) @ marginal price of €x/t Quantum Abated (Mt)

  8. Policy coherence (lack of …) Reduction Target (Mt) @ marginal price of €x/t x x2 €/t 0 Reduction Target (Mt) @ marginal price of €x/t Quantum Abated (Mt)

  9. Regulatory interference – future shock? Real Crisis ETS Cap EUA Price Reality? “Set-aside” adjustment Model projections €/t Crisis Supply Demand balance (Mt CO2) Equilibrium point 0 Historic Current Future Time

  10. Beyond 2020 … • Principles • Recognise science • Least cost • Coherent system approach to energy transformation • Policy approach • Instrument coherence – single “driver” for decarbonisation • Well-functioning markets • Early agreement on 2030 targets • Outcomes • Internal Energy Market + ETS drives decarbonisation and innovation? • Mandatory RES share (40%+ in 2030) undermines IEM and collapses ETS?

  11. Decarbonised Electricity for a Decarbonised Economy: Can everything be connected…. Adaptation Impacts v-RES CCS Nuclear… Demand Storage Cycling… Networks Meters ICT… Energy Carbon Services… Available Affordable …. Climate Change Mitigation New Techn- ologies Flexible Systems Smart Grids Market Design “Invest- ability” Science Policy Acceptability RD&D Plant Conflicts RD&D RD&D Interconn- ection Integration Utilities v. others Europe v. RoW

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