Emission trading north – benefits for the economy and the environment

Panel: Panel 5. Market-based instruments

Authors:
Katja Barzantny, Energiestiftung Schleswig-Holstein
Michael Hahn, ERM Lahmeyer Int. GmbH
Martin Kruska, EUtech Energie + Umwelt, Technik + Management
Michael Klein, 500 PPM Gesellschaft für Emissionshandel und Beratung mbH

Abstract

In co-operation with the Association of the Chambers of Industry and Commerce in Schleswig-Holstein and the Union of Employers' Associations in Hamburg and Schleswig-Holstein the Energy Foundation Schleswig-Holstein is carrying out the pilot project Emission Trading North. Its primary target is the regional application of the flexible mechanisms (ET, JI, CDM) together with the industry of Schleswig-Holstein. In detail, it focuses on capacity building on behalf of the different parties involved, a smooth transition to real ET and the positioning of the Energy Foundation in a future ET system.

The project cycle consists of 3 phases (Phase 0: preparatory work; Phase 1: development of emission inventories, identification and evaluation of emission reduction measures; Phase 2: simulation of ET). Participating companies located in Schleswig-Holstein and Hamburg, representing the power sector, cement production, paper and pulp production, non-ferrous metals as well as the renewable energy sector, dealt with the central question of allocation of emission allowances. During in-depth energy analyses emission reduction measures were identified and evaluated with respect to their volume of emission reductions and related costs. Participating companies developed mid and long-term trading strategies taking into account investment cycles, project risks and market prices. The strategy was tested during a multi-period trading simulation.

With respect to the national allocation plan, a central element of the future European emission trading system, the pilot project proposes consistent solutions relating to CHP, capacity limits, process emissions, fuel substitutes, new entrants and shut-down of installations.