Register ID: Hauke Hermann. Berlin, 31 st January 2012

Transcription

1 Contribution to the Public Consultation on Draft Commission Guidelines for State aid in the context of the amended EU Emissions Trading Scheme post 2012 Register ID: Berlin, 31 st January 2012 Hauke Hermann Öko-Institut (Institute for Applied Ecology) Schicklerstraße 5-7 D Berlin Germany Tel.: +49-(0) Fax: +49-(0) Freiburg Head Office Merzhauser Straße 173 D Freiburg Germany Tel.: +49-(0) Fax: +49-(0) Büro Darmstadt Rheinstraße 95 D Darmstadt Germany Tel.: +49-(0) Fax: +49-(0)

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5 Öko-Institut (Institute for Applied Ecology) Contents 1 Introduction Comparison of spot-prices in Germany and France Fossil fuel mix Summary and conclusions References

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7 Öko-Institut (Institute for Applied Ecology) 1 Introduction In its consultation document the European Commission proposes to use regional emission factors as presented in Annex IV. These are calculated based on the average specific emissions of the fossil electricity generation. For example Annex IV includes the following emissions factors: The emission factor for the country group Germany, Austria and the Netherlands is 0.79 t CO 2 / MWh; The emission factor for the country group France, Belgium and Luxemburg is 0.61 t CO 2 / MWh. In general we miss a scientific justification why the emission factor of t CO 2 / MWh used for the carbon leakage assessment (CEC 2011) is not used for the compensation for indirect costs. For reasons of simplicity, transparency and equal treatment of companies across the EU this factor should also be used for the compensation. In this contribution it was only possible to contribute to two very specific - but important issues: Chapter 2 explores whether it is justified or not to differentiate the emission factor between the prices zones of Germany and France. Chapter 3 explores the question whether it makes sense to include lignite when the regional emission factor is calculated. Due to time constrains it was not possible to address other important aspects. For example the emission factor of Denmark seems too high. As prices in Denmark are either coupled to the continental or the Nordic market using the average between the two could be an option. It was also not possible to address the question whether electricity intensive companies can pass through CO 2 costs to their clients

8 /MWh Öko-Institut (Institute for Applied Ecology) 2 Comparison of spot-prices in Germany and France Figure 1 shows the sorted price curve of spot prices for the day-ahead market in Germany and France in the year The following impressive conclusions can be drawn: It is striking that for the most expensive 7000 hours the price curves run in parallel. This shows that prices in Germany are exactly the same in hours of high and medium demand and high/medium prices. Prices in Germany only deviate from the prices in France when prices are very low (i.e. if prices are between 0 and 40 / MWh), and the interconnector capacity between the two countries is insufficient to eliminate the price difference. Thus a price difference only occurs if prices are very low anyway. Therefore analysing the percentage of hours with the same price is not sufficient. When determining price zones also qualitative aspects of the price coupling should be taken into account (i.e. in which hours no coupling happens and how big the price difference is). As market coupling only started in November 2010 it seems too early to separate regions at this stage. Figure 1 Comparison of spot electricity prices in Germany and France, DE Day ahead 2011 FR Day ahead Source: EPEX Spot - 8 -

9 /MWh Öko-Institut (Institute for Applied Ecology) 3 Fossil fuel mix In Figure 2 short term marginal costs of old and inefficient lignite fired power plants (efficiency 32%) are compared with Day Ahead spot prices in Germany. We find that electricity spot market prices in Germany are only in the range of the short term marginal cost of lignite fired power plants in 562 hours of the year. As a year has 8760 hours per year lignite power plants are potentially price setting in less than 6% of the hours in the year Therefore lignite fired electricity generation should not be taken into account when the emission factor for compensation is calculated. Figure 2 Comparison of spot electricity prices in Germany with short term marginal costs of old lignite fired power stations in Germany, SMC lignite Day ahead Source: EPEX Spot, Öko-Institut - 9 -

10 Öko-Institut (Institute for Applied Ecology) 4 Summary and conclusions In general we miss a scientific justification why the emission factor of t CO 2 / MWh used for the carbon leakage assessment is not used for the compensation for indirect costs. For reasons of simplicity, transparency and equal treatment of companies this factor should also be used for the compensation of indirect effects. From a scientific perspective we show selected problems related with regional emission factors using Germany as an example. The following findings need to be stressed: The same emission factor should be used for central Western Europe. In analysing the structure of spot prices in Germany and France we find that prices are the same in all relevant hours with high prices. Only in extreme cases such as very low demand, holidays, Sundays, where also industrial production is lower, prices in Germany and France deviate. When calculating the regional emission factor lignite should not be taken into account as lignite is used for the production of base load power and is rarely the marginal power plant. When nuclear is excluded from the calculation of the regional emission factor also lignite needs to excluded, as both fuels are used to produce base load power

11 Öko-Institut (Institute for Applied Ecology) 5 References Commission of the European Communities (CEC), (2011); Commission Decision of 11 November 2011 amending Decisions 2010/2/EU and 2011/278/EU as regards the sectors and subsectors which are deemed to be exposed to a significant risk of carbon leakage (notified under document C(2011) EU (2009b): Directive 2009/29/EC of the European Parliament and of the council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community, Official Journal of the European Union,