Member States' Rules for Allocating Emission
Allowances Will Be Critical
LONDON, UK, June 11, 2002 - ICF Consulting's
European Carbon Market Outlook 2002 indicates that
many assets owned by electric utilities in the European
power market will appreciate in value by more than 90 percent
with the introduction of a European Union-wide cap-and-trading
system for greenhouse gas (GHG) emissions. However, it also,
identifies several market participants that have significant
value at risk in the form of potentially stranded assets.
The power sector produces more than 30 percent of carbon
dioxide emissions in the EU and is one of five sectors targeted
for inclusion in the European Commission's proposed Europe-wide
GHG emissions trading scheme scheduled to begin in 2005.
According to Simon Allen, President of ICF
Consulting Europe, "The introduction of GHG emissions
constraints into the European power sector will have the
most dramatic impact on the industry since the single market
was launched. Using our in-house Integrated Power Model
for Europe, we have examined several scenarios to quantify
the potential scale of financial risks and gains for market
participants. GHG emissions constraints will accelerate
the shift to natural gas in many regions and will improve
the value of existing gas-fired assets by more than 90%
in many cases. In the short term, coal-fired plants in a
number of countries may benefit from the forecast upward
trend in wholesale electricity prices arising from the internalisation
of the value of GHG emissions. In the longer term, however,
inefficient coal-fired assets are particularly at risk;
by 2010, more than 38 GW of coal-fired capacity may be forced
into early retirement."
Abyd Karmali, ICF Consulting's Director of
European Climate Change Services, adds, "What the analysis
demonstrates is that it is now essential for players in
the European power sector to be meaningfully engaged on
the issue of how Member States might allocate GHG emissions
allowances. Our analysis demonstrates that each company
has significant value at stake under different regulatory
and emissions market development scenarios. Furthermore,
companies will need to incorporate into their strategy the
complex interactions between an EU emissions trading market
and country-specific markets for renewable energy certificates.
We have determined which countries will offer outstanding
green premiums for electricity generated from renewable
sources."
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ICF International (Nasdaq: ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, environment, transportation, social programs, defense, and homeland security markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 1,800 employees serve these clients worldwide. ICF’s Web site is http://www.icfi.com.
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For Immediate Release
United Kingdom Contact: Abyd
Karmali
Tel: 44 (0) 20.7092.3005
United States Contact: Douglas
Beck
Tel: 1.703.934.3820
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