allocation method in proposed ets review - view of european power producer - zuzana krejčiříková...
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allocation method in Proposed ETS review - view of European
Power Producer -
Zuzana KrejčiříkováEuropean Affairs Director
EP conference, 2 December 2008, Brussels
2
NEW EU MEMBERS ARE FACING LACK OF ELECTRICITY GENERATION CAPACITY
Source: Eurostat, Eurelectric
* 10 EU members without Cyprus and Malta ** Decommissioning of thermal plants older than 45 years
Growing demand and the decommissioning of 28 GW aged capacity will lead to 56 GW capacity deficit
Needed investments over 60 billion euros to build the missing capacity
0
20
40
60
80
100
120
2007 2020
Decommissioning of old plants**
Demand Growth 2%
56 GW gap
New EU members* electricity balance development
Ne
t c
ap
ac
ity
(G
W)
<10
10-20
20-30
30-40
Plant age
>40
3
THE COST OF CO2 ALLOWANCES IN THE 2013-2020 PERIOD IS 57% HIGHER THAN THE VOLUME OF INVESTMENTS NEEDED
62
97
0102030405060708090
Needed investments* Cost of buying CO2allowances 2013-2020**
EUR bn
Source: Pointcarbon
* Average Capex 1100 EUR/kW
** Allowance price per 30 EUR/t considered
4
11,4
39,9
0
5
10
15
20
25
30
35
40
45
Average GDP per capita 2007
3,9
6,6
0
1
2
3
4
5
6
7
Electricity consumption percapita 2007
USD ‘000 MWh/year
+250 %
+69 %
Source: World Bank, Eurostat
ON THE WAY TO ECONOMIC CONVERGENCE, NEW EU MEMBERS WILL PROBABLY EXPERIENCE SIGNIFICANT GROWTH OF ELECTRICITY CONSUMPTION
New EU countries* EU 15* Excl. Cyprus, Malta
5
NEW EUROPEAN UNION STATES HAVE VERY DIFFERENT GENERATION MIXES TO PARTS OF EU
Denmark and the United Kingdom also rely heavily on carbon intensive power generation
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Lignite Hard Coal Gas/Oil
Nuclear Hydro Other
Power generation net capacity structure (2007)
Source: Eurostat, Eurelectric
6
NEW EU COUNTRIES HAVE ALREADY DECREASED THEIR CO2 EMISSIONS BY 24% COMPARED TO 1990 LEVELS
505
665
0
100
200
300
400
500
600
700
1990 2007
Total CO2 emissions of new EU countries*Mt CO2/year
-24 %
Source: Pointcarbon, Eurostat
* Excl. Cyprus, Malta
7
Auction as a primary allocation method is a logical development of the scheme
Sudden implementation of the auction for power sector (0% → 100%) is a dangerous shock with the risk of a quick phase-out of carbon intensive power plants and lack of capacities in Europe and will draw out necessary funds for modernisation away from industry
EU ETS revision – allocation method of emission allowances
Gradual auctioning of emission allowances for power sector from 20% in 2013 to 100% in 2020