Tools - Modelling Systems

EU ETS Price Model

The ECN CO2 price tool is a market simulation model that predicts, explains and analyses the price of a CO2 emission allowance within the EU ETS in the period up to 2020. In particular, the model analyses the impact of both market fundamentals (e.g. economic growth, fuel prices) and policy variables (e.g. targets for energy efficiency and renewables) on the EU ETS carbon price.

The key variables fall within two categories: i) demand side variables (market fundamentals and policy variables) and ii) supply side variables (related to CO2 abatement technologies). The tool calculates the emissions growth of the ETS sectors due to economic growth and fuel price changes and subsequently subtracts the emissions reductions due to policy variables (renewable energy and energy efficiency targets). Offset credits from JI and CDM and the demand from the aviation sector are also considered.

Questions the model may answer include:

• What are the implications of changes in economic growth and/or fuel prices on the CO2 price of the EU ETS?
• What is the impact of EU Member States’ efforts/failures to meet their renewable energy targets on the price of a CO2 allowance?
• What is the effect of (changes in) CDM/JI offset credits on the EU allowance price?

For more information please contact Jos Sijm.