The impact of carbon emissions trading across the electricity value chain

The impact of carbon emissions trading across the electricity value chain: Responding to the developing EU environmental agenda, 2005-10.

Price EUR 3.574.26 Publisher Datamonitor Publication date 24 February 2005 Available from Dispatched and sold by marketresearch.

Introduction
This report analyses how the introduction of the EU Emissions Trading Scheme is influencing the way in which energy utilities will have to structure their generation and supply businesses between 2005-10. The purpose of the report is to offer utilities a set of actionable recommendations aimed at improving their efficiency and profitability in the new age of growing environmental pressures.

Scope
Geographic coverage includes EU25, with special focus on the six key liberalised markets: Germany, France, the UK, Italy, Spain and the Netherlands.

The scope of this study is the entire electricity value chain, although in-depth analysis centres on the core stages of power generation and supply.

The time frame covered includes the period between 2005-10, although some longer-term implications of emissions quotas are also considered.

Analysis in the report is based on Datamonitor's proprietary analytical models describing both the long-term and short-term power market equilibrium.

Highlights
On current trends, CO2 emission caps would result in a 500TWh annual power production shortfall in EU25 by 2010, with Italy likely to be particularly affected. As a result, member states will need to radically change their generation portfolios to satisfy the growing demand while decreasing the carbon content of power production.

Multiple strategies are available to utilities in how to pass on the costs of compliance with emissions caps onto their customers. In each case, the optimal cost assignment mechanism will depend on the structure of a utility's generation portfolio, its customer base and the severity of emissions reductions it is facing.

Carbon trading reinforces existing trends towards internationalisation of procurement and risk management activities by utilities. In the longer term, emissions quotas and the growth of renewable generation will require major investment in electricity networks.

Reasons to Purchase
Detailed analysis of the impact carbon emissions capping and trading will have on Europe's electricity sector between 2005-10.

Actionable recommendations to utilities on minimising the costs of compliance with emissions quotas and on passing those costs onto their customers.

Based on Datamonitor's proprietary models that identify the short- and long-term optimum solutions for coping with emissions quotas.