Explanatory Note
ETS Emissions to fall 4.4%
Sandbag estimates ETS emissions will fall by 4.4% in 2014, from 1904mt in 2013 to 1820mt in 2014.
This fall is split by 81mt from the power sector (falling 7.0% from 1156mt to 1075mt; see Table 1), and 3mt from the industrial sector (falling 0.4% from
748mt to 745mt).
Sandbag estimates supply of 1709mt to market in 2014, leaving a shortage of 111mt of permits (see Table 2). This means the surplus reduces only 5%, still
leaving over 2billion allowances in the market at the end of 2014, despite the back-loading decision which takes 393mt of supply away from the market in
2014.
Dave Jones, Sandbag Analyst, says: “With emissions falling structurally well below the level of the cap, the back-loading decision is now providing nothing
more than a feeble brake on the growing surpluses within the scheme. If the oversupply of allowances is to be tamed, more substantive requirements are
urgently required, including an early, aggressive implementation of the European Commission’s proposed Market Stability Reserve. It is also imperative that
back-loaded allowances are not allowed to return to the market.”
The large 7.0% fall in power sector emissions is primarily from:
-
A massive 3.8% year-to-date fall in electricity demand across the EU which is in part from weather-related factors (very mild Q1, mild August) and in
part from a structural fall in demand due to energy efficiency improvements in all sectors.
A large increase in renewables capacity, and a windy Q1.
Summer coal-gas switching in UK – this only happened in UK where there is currently a £9/tonne carbon tax; despite the fall in summer gas prices,
the ETS carbon price alone was not enough to encourage switching on the continent.
Sandbag built this up country-by-country from a variety of national TSO and government data sources, ENTSO-E data, and its own estimates.
Explanatory Note
ETS Emissions to fall 4.4%
Note, this follows a 5% fall in power sector emissions from 2012 to 2013, as LCPD coal closed in UK and France, European electricity demand fell 0.9% and
substantial new renewables capacity was built.
The 0.4% fall in industrial emission is primarily forecast from industry association estimates for 2014 production levels:
-
A fast fall in non-CO2 emissions added into the ETS in a 2013 scope change,
Small falls in oil and paper production
Offset against temporarily higher cement and steel production
Please contact dave@sandbag.org.uk or phone (+44) 02071 486377 with any questions.
Explanatory Note
ETS Emissions to fall 4.4%
Table 1: Power Sector Emissions
Change Jan-Aug 2014 versus Jan-Aug 2013
Full year numbers
2013 actual
2014 estimate
Emissions
Coal+Lignite
Gas
Renewables
Elec consumption
emissions
emissions*
mt
TWh
TWh
TWh
%
mt
mt
Germany
-18
-18
-6
9
-4.2%
330
309
UK
-17
-18
-1
4
-5.7%
150
133
France
-9
-8
-6
3
-8.4%
34
24
Poland
-8
-9
-1
2
0.0%
161
152
Italy
-7
-4
-8
3
-3.3%
95
87
Finland
-4
-2
-6
0
-1.8%
19
14
Denmark
-3
-2
-1
2
-1.0%
15
12
Belgium
-2
0
-4
1
-2.3%
13
11
Austria
-1
-1
-1
-1
2.6%
6
5
Spain
-1
2
-6
0
-1.4%
63
61
Portugal
-1
-1
-1
1
-0.5%
13
12
Ireland
0
0
0
0
-0.8%
11
10
Hungary
0
0
-1
0
-4.4%
12
12
Netherlands
-2
0
-4
0
-0.7%
43
42
Norway
0
0
0
0
-5.0%
1
1
Greece
0
1
-2
1
-3.0%
44
44
Czech
0
1
-1
-1
0.2%
50
50
Romania
1
1
0
1
0.6%
25
25
Other
69
69
Total
-72
-59
-47
25
-3.8%
1,156
1,075
* Assuming 2.5% fall in emissions for Sep-Dec 2014, due to rising renewables capacity and falling demand
% Change
%
-6%
-12%
-29%
-6%
-8%
-24%
-19%
-16%
-23%
-2%
-7%
-4%
-2%
-5%
5%
0%
0%
3%
-1%
-7.0%
Explanatory Note
ETS Emissions to fall 4.4%
Table 2: Calculations for annual surplus on the EU Emissions Trading Scheme
Phase 2
mt
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2008-2020
Total
2,011
2,049
2,081
2,101
2,140
30
17
17
17
17
17
17
17
10,530
Phase 3
Allocations
0
0
0
0
0
1,004
846
819
793
769
745
722
699
6,397
CER's
Auctions
0
0
0
0
120
1,016
628
628
730
934
937
1,243
1,570
7,807
Power
allocations
(Article 10c)
0
0
0
0
0
0
130
115
98
81
63
42
0
528
NER (excl
NER300)
0
0
0
0
0
7
15
25
35
45
55
65
233
480
Remaining
cap to
market
0
0
0
0
0
0
15
25
35
45
55
65
151
391
Total
0
0
0
0
120
2,027
1,634
1,611
1,692
1,874
1,855
2,137
2,653
15,603
Total
84
81
137
254
504
133
58
58
58
58
58
58
58
1,600
Legal cap
Total
Supply
2,094
2,130
2,218
2,355
2,764
2,190
1,709
1,686
1,767
1,949
1,930
2,212
2,728
27,733
Emissions
2,120
1,880
1,939
1,905
1,867
1,904
1,820
Annual
surplus
-25
250
279
450
896
286
-111
Cumulative
surplus
-25
225
504
955
1,851
2,137
2,026
Phase 2
2,106
2,106
2,106
2,106
2,106
0
0
0
0
0
0
0
0
10,530
Phase 3
0
0
0
0
0
2,084
2,046
2,008
1,970
1,931
1,893
1,855
1,816
15,603