Euro-climate gas trading simulation extended

Eurelectric to test whether emissions trading beneficial for wider energy sector

Europe's electricity industry is to launch a new version of its greenhouse gas emission trading simulation this week to determine whether firms in other energy-producing and energy intensive-using industries could benefit. Eurelectric plans to present results from the exercise later this year.

Organised by Eurelectric and the Paris Bourse, the first simulation exercise involved 16 electricity companies trading emissions over eight weeks representing the period 2001-2012 (ENDS Daily 21 October 1999). The association deemed the exercise to have been a success, saying that it showed trading gave "clear price signals" of the value of emissions and led to "early investment" in greenhouse gas abatement technology.

In the second simulation, a more diverse group of 34 companies will attempt to meet demand for their products while meeting emissions targets. John Scowcroft of Eurelectric said the aim was to see if trading "produces a similar result in a wider market" despite the "complicated interrelationships" in the system. The results will be presented at the sixth conference of parties to the UN climate change convention in The Hague in November.

According to Eurelectric, the simulation will set two types of target, an absolute cap on emissions and a relative reduction per unit of output, with emission permits valid for both. It will also allow targets to be met by using the joint implementation and clean development mechanism initiatives agreed in the Kyoto protocol.

Follow Up:
Eurelectric tel: +32 2 515 1000 and a press release, plus more information on the second simulation exercise at GETS 2.

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