Embed Size (px)
DESCRIPTION
AGL Energy: How does emissions trading work
Citation preview
Emissions trading
A presentation prepared by AGL
For further information:Simon [email protected] Tim [email protected]
2Emissions trading: an example
Assumptions:› One gas producer
› One electricity generator
› Economy wide emissions equal 150 tonnes (tCO2-e)
ETS Introduced:› Cap of 125 tCO2
-e
› 120 permits are allocated and 5 permits are auctioned (1 permit = 1 tCO2-e)
80 tCO2-e allocated
40 tCO2-e allocated
Permits Held
125 tCO2-e cap for the
economy
Emissions Cap Emissions
100 tCO2-e
50 tCO2-e
Coal Generator
Gas Producer
Both covered by a cap and trade
» AGL Energy
» March 2010
3
Allocated = 80 tCO2-e
Sold to gas producer = 5 tCO2-e
Total permits = 75 tCO2-e
Allocated = 40 tCO2-e
Bought at auction = 5 tCO2-e
Bought from coal generator =5 tCO2
-e
Total permits = 50 tCO2-e
Permits Held
125 tCO2-e cap
for the economy
Emissions Cap Emissions
100 tCO2-e
50 tCO2-e
Coal Generator
Gas Producer
Emissions trading: an example
Trade Commences: › Gas producer buys 5 permits at auction and 5 permits from the coal
generator
» AGL Energy
» March 2010
4
Zero emissions generation:
Requires no permit
Allocated = 80 tCO2-e
Sold to gas producer = 5 tCO2-e
Total permits = 75 tCO2-e
Allocated = 40 tCO2-e
Bought at auction = 5 tCO2-e
Bought from coal generator =5 tCO2
-e
Total permits = 50 tCO2-e
Permits Held
125 tCO2-e cap
for the economyReduced production to emit
75 tCO2-e
Coal Generator
Emissions Cap Emissions
Zero
50 tCO2-e
RenewableGenerator
Gas Producer
Emissions trading: an example
Low emissions investment commences:› Gas producer maintains production but at higher cost
› Coal fired generator cuts production
› New renewable generator is constructed to meet energy demand
» AGL Energy
» March 2010
