* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Strategies for suppliers in a carbon constrained world
Public opinion on global warming wikipedia , lookup
Economics of global warming wikipedia , lookup
Global warming wikipedia , lookup
Kyoto Protocol wikipedia , lookup
Climate change feedback wikipedia , lookup
2009 United Nations Climate Change Conference wikipedia , lookup
Emissions trading wikipedia , lookup
Low-carbon economy wikipedia , lookup
IPCC Fourth Assessment Report wikipedia , lookup
Climate change mitigation wikipedia , lookup
New Zealand Emissions Trading Scheme wikipedia , lookup
Carbon pricing in Australia wikipedia , lookup
United Nations Framework Convention on Climate Change wikipedia , lookup
Economics of climate change mitigation wikipedia , lookup
Fossil fuel phase-out wikipedia , lookup
Views on the Kyoto Protocol wikipedia , lookup
Politics of global warming wikipedia , lookup
Climate change in New Zealand wikipedia , lookup
Coal in China wikipedia , lookup
Years of Living Dangerously wikipedia , lookup
German Climate Action Plan 2050 wikipedia , lookup
European Union Emission Trading Scheme wikipedia , lookup
Business action on climate change wikipedia , lookup
Carbon emission trading wikipedia , lookup
Carbon Pollution Reduction Scheme wikipedia , lookup
Mitigation of global warming in Australia wikipedia , lookup
Strategies for suppliers in a carbon constrained world Coaltrans, October 2004 Jon Dudas “Dethroning King Coal” * • Environmental enemy no. 1 • Google results 1 - 10 of about 1,960,000 (English) pages for global warming • Google results 1 - 20 of about 17,100 images for global warming 100m sea rise * Economist, July 4, 2002 Lawrence Williams- An End to Global Warming Mark Maslin Carbon constrained world a reality • evidence of global warming due to anthropogenic GHG emissions is mounting • increasingly clear that a carbon constrained world will become a reality • multiple initiatives are under way to realise this: – UNFCCC (1992) and the Kyoto Protocol (1997) were first steps – EU Emissions Trading Scheme (ETS) is the first multilateral trading schem starts January 2005 will go ahead even if Kyoto is not ratified – NSW in Australia commenced emissions trading scheme January 2003 – Japan and Canada plan to implement their own emissions trading schemes – in the USA, support for a scheme to reduce GHG emissions is growing Technological developments will address this over time • coal has become cleaner over time: efficiency and emissions reductions • continuing efforts to improve coal power efficiency levels… both absolute and relative to gas – ultra-super critical combustion, oxygen fired combustion, circulating moving bed • many research programmes for clean coal technologies - IGCC - chemical looping integrated to CO2 sequestration central technologies already proven ….. process of integrating them and improving system economics The EU ETS is a prototype for the future • in coal marketing and environment related issues, the EU is a leading market – to widely use a coal index for swap trading and pricing purposes – to implement renewable electricity generation targets and emissions trading scheme • belief that the EU ETS will become a successful and liquid market • EU emissions trading scheme is a prototype for implementation elsewhere 12 Weekly Volume Pri ce Pr ice (Eur o/t) 10 300000 250000 200000 8 150000 6 4 2 Ju l -0 N 3 ov -0 3 Ja n04 M ar -0 4 Ap r -0 4 Ap r -0 4 Ap r0 M 4 ay -0 4 Ju n04 Ju l -0 4 Ju l -0 4 Ju l -0 Au 4 g0 Au 4 g0 Se 4 p0 Se 4 p0 Se 4 p0 Se 4 p04 O ct -04 0 Source: TFS 100000 50000 0 Volume Traded (t) 14 Coal is a major contributor to GHG emissions • power an easy target for emissions reduction legislation – large CO2 emission intensive assets in regulated industry • within power industry, coal-fired generation (CF) is the most carbon intensive…. increasingly under threat from gas fired generation – CF generation emits 0.9 t CO2/MWh – CCGT gas-fired generation emits 0.4 t CO 2/MWh • globally, CF generation emits 6 066 Mt CO2 or 26 % of global CO2 emissions • across the EU, CF generation represents 20 % of all CO2 emissions • CF generation represents 36 % of the emissions in the EU ETS Coal fired generators AND coal suppliers are facing a significant challenge in the changing regulatory environment Source: IEA CO2 from Fuel Combustion 1971 - 2001, 2003 Edition Strategic decisions for coal suppliers • carbon-constrained world is real…. but policies and regulations remain a moving target • suppliers must choose response to changes in regulation and fuel markets • pre-position your company and respond to uncertainty – scenarios of the future vary widely – strategies need to be flexible and adaptable – danger of being left behind…..but also of being too far in front • the greater the uncertainty, the higher the value of flexibility • portfolio approach to fuel supply is the optim al approach – coal plus increasing role for renewables and emissions credits three generic choices: Wait and see/ Participate / Embrace the opportunity Strategic choices for coal suppliers • Wait and see – monitor the regulatory environment – wait for clarity on rules – comply • Participate – internal structures in place, small scale trading (even before regulation is fully in place) – participation in Clean Development Mechanism (CDM) activities • Embrace the opportunity – – – – help shape the development of regulation and the market integrate emissions into business new product development global participation Embrace strategy • aim to become a market leader in the field How ? – shape the development of and influence market structure – new products assist customers to run coal plants optimally …….. and burn the maximum amount of coal – create a liquidly traded market to increase transparency ……. reduces the cost of compliance • but this strategy has its drawbacks: – will make mistakes and pay some “school fees” – accept some regulatory uncertainty and volatility – requires upfront investment without the guarantee of returns What can be structured? • An example is the guaranteed delivery of CDM credits – – – – – – access a large number of global projects due diligence and contract negotiation manage the credit and delivery risk aggregate credits for multiple utilities carbon credits become “fuel” component augment/ replace utilities’ own reduction activities and credit purchases – product has the most value as a long term stream of credits ………. especially when combined with long term coal contracts Your CO2 emissions ? Coal buyer 2004- 216 g/km of CO2 Driver career commute- 130 000t Coal seller 2004- 9 g/km of CO2 * Driver career commute- 1 800t * [based on cyclist consuming 6.3g of rice and using 22 Kcal/ km] Conclusions • carbon-constrained world is a reality • largest impacts of climate change are yet to come: – initial responses are behavioural …. involving energy efficiency improvement, fuel switching, emissions credits – fundamental investment shifts will follow switch to gas, nuclear and renewable generation capacity…... and clean coal • the climate change perspective has to be addressed by coal producers and power generators working together Together embrace the change and shape the (our) future market