Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Expertise. Integrity. Excellence.
Confidential
EU Emissions Trading Scheme – policy, prices
and risk management
Louis Reds...
Expertise. Integrity. Excellence.
Confidential
Summary
• About Redshaw Advisors
• Recent policy developments
• Upcoming po...
Expertise. Integrity. Excellence.
Confidential
About Redshaw Advisors
Why?
To help companies to be successful in carbon ma...
Expertise. Integrity. Excellence.
Confidential
Expertise. Integrity. Excellence.
Confidential
About Redshaw Advisors
bring...
Expertise. Integrity. Excellence.
Confidential
Summary
• About Redshaw Advisors
• Recent policy developments
• Upcoming po...
Expertise. Integrity. Excellence.
Confidential
Expertise. Integrity. Excellence.
Confidential
Recent policy developments
• ‘Backloading’
– Legislation passed in March 20...
Expertise. Integrity. Excellence.
Confidential
Summary
• About Redshaw Advisors
• Recent policy developments
• Upcoming po...
Expertise. Integrity. Excellence.
Confidential
Upcoming policy developments
• Review of Phase IV
– Proposals released in J...
Expertise. Integrity. Excellence.
Confidential
Summary
• About Redshaw Advisors
• Recent policy developments
• Upcoming po...
Expertise. Integrity. Excellence.
Confidential
The EU want the
price higher and it
seems to be working
Expertise. Integrity. Excellence.
Confidential
Summary
• About Redshaw Advisors
• Recent policy developments
• Upcoming po...
Expertise. Integrity. Excellence.
Confidential
Example financial exposure: the double-whammy
0
2
4
6
8
10
12
14
16
-
10,00...
Expertise. Integrity. Excellence.
Confidential
Example financial exposure: the double-whammy
A typical installation faces ...
Expertise. Integrity. Excellence.
Confidential
Example financial exposure: the double-whammy
A typical installation faces ...
Expertise. Integrity. Excellence.
Confidential
Summary
• About Redshaw Advisors
• Recent policy developments
• Upcoming po...
Expertise. Integrity. Excellence.
Confidential
Carbon emissions,
allocations, forecasts,
regulations & prices
… what do we...
Expertise. Integrity. Excellence.
Confidential
EU Emissions Trading Scheme – policy, prices
and risk management
Louis Reds...
Expertise. Integrity. Excellence.
Confidential
www.redshawadvisors.com
Upcoming SlideShare
Loading in …5
×

EU Emissions Trading Scheme - policy, prices and risk management

440 views

Published on

By Louis Redshaw, Redshaw Advisors Ltd. This was presented during the ETS review: Strategic choices for industry's future session, organised as part of European Paper Week 2015. More at http://www.cepi.org/epw

Published in: Business
  • Be the first to comment

  • Be the first to like this

EU Emissions Trading Scheme - policy, prices and risk management

  1. 1. Expertise. Integrity. Excellence. Confidential EU Emissions Trading Scheme – policy, prices and risk management Louis Redshaw, Redshaw Advisors Ltd louis.redshaw@redshawadvisors.com Tel: +44 (0)20 3637 1055
  2. 2. Expertise. Integrity. Excellence. Confidential Summary • About Redshaw Advisors • Recent policy developments • Upcoming policy developments • Carbon price history & the impact of policy changes • Impact of policy developments on company finances • What companies can do to manage the risk
  3. 3. Expertise. Integrity. Excellence. Confidential About Redshaw Advisors Why? To help companies to be successful in carbon markets What? We are carbon market experts. We; – Inform – Advise – Procure. Where? Serving Europe from London, the global centre of carbon legal, financial and consulting expertise Our ethos Well informed companies make better risk management decisions, because they have the confidence to know when to act. Expertise. Integrity. Excellence. Confidential
  4. 4. Expertise. Integrity. Excellence. Confidential Expertise. Integrity. Excellence. Confidential About Redshaw Advisors bringing together experts from a variety of professional backgrounds
  5. 5. Expertise. Integrity. Excellence. Confidential Summary • About Redshaw Advisors • Recent policy developments • Upcoming policy developments • Carbon price history & the impact of policy changes • Impact of policy developments on company finances • What companies can do to manage the risk
  6. 6. Expertise. Integrity. Excellence. Confidential
  7. 7. Expertise. Integrity. Excellence. Confidential Recent policy developments • ‘Backloading’ – Legislation passed in March 2014 – 900Mt are removed from auction supplies over 3 years • 400Mt in 2014 • 300Mt in 2015 • 200Mt in 2016 – Removes ‘excess’ carbon from the EU ETS – Designed to increase carbon prices. • Market Stability Reserve – Final stamp of approval given on Friday 18th Sept – Withdraws 12% of any excess carbon every year from 2019 – Will re-inject carbon only if excess drops below a low threshold – Explicitly designed to boost prices – Will have a BIG impact on future carbon prices
  8. 8. Expertise. Integrity. Excellence. Confidential Summary • About Redshaw Advisors • Recent policy developments • Upcoming policy developments • Carbon price history & the impact of policy changes • Impact of policy developments on company finances • What companies can do to manage the risk
  9. 9. Expertise. Integrity. Excellence. Confidential Upcoming policy developments • Review of Phase IV – Proposals released in July 2015 – Far reaching changes to: • Benchmarking • Linear Reduction Factor • Use of offsets – Cross Sectoral Correction Factor (CSCF) doesn’t go away – Leakage list changes will have by far the biggest impact. • International climate agreement – COP 21 in Paris later this month • INDCs • European commitment • Future development of carbon targets • Effort Sharing Decision – April 2016 the EU will decide how the 40% reduction effort will be split – Phase IV negotiations will be affected.
  10. 10. Expertise. Integrity. Excellence. Confidential Summary • About Redshaw Advisors • Recent policy developments • Upcoming policy developments • Carbon price history & the impact of policy changes • Impact of policy developments on company finances • What companies can do to manage the risk
  11. 11. Expertise. Integrity. Excellence. Confidential The EU want the price higher and it seems to be working
  12. 12. Expertise. Integrity. Excellence. Confidential Summary • About Redshaw Advisors • Recent policy developments • Upcoming policy developments • Carbon price history & the impact of policy changes • Impact of policy developments on company finances • What companies can do to manage the risk
  13. 13. Expertise. Integrity. Excellence. Confidential Example financial exposure: the double-whammy 0 2 4 6 8 10 12 14 16 - 10,000 20,000 30,000 40,000 50,000 60,000 2013 2014 2015 2016 2017 2018 2019 2020 Allocation Price
  14. 14. Expertise. Integrity. Excellence. Confidential Example financial exposure: the double-whammy A typical installation faces decreased allocation and increasing carbon price • Emissions: 50,000 per year • Compliance fully covered by free allowances in 2013 • Decrease in free allocation in line with average in Europe • 2015 cost: €42k • >400% increase from the cost in 2015 - 22 42 69 87 93 120 190 2013 2014 2015 2016 2017 2018 2019 2020 • 2020 cost: €190k Annualcompliancecost(€k)
  15. 15. Expertise. Integrity. Excellence. Confidential Example financial exposure: the double-whammy A typical installation faces decreased allocation and increasing carbon price • Phase IV • Allocation 30% of requirement • Emissions reductions not easy after the fuel-switch limit reached - 22 42 69 87 93 120 190 567 644 721 875 1,138 1,225 1,400 1,575 1,750 2013 2015 2017 2019 2021 2023 2025 2027 2029Annualcompliancecost(€k) • Price rises further What have you budgeted for future carbon costs?
  16. 16. Expertise. Integrity. Excellence. Confidential Summary • About Redshaw Advisors • Recent policy developments • Upcoming policy developments • Carbon price history & the impact of policy changes • Impact of policy developments on company finances • What companies can do to manage the risk
  17. 17. Expertise. Integrity. Excellence. Confidential Carbon emissions, allocations, forecasts, regulations & prices … what do we do? Things every company must do: • Model their expected carbon shortfall • Stay on top of market developments • Obtain a reliable carbon price forecast • Model their short, medium and long term financial exposure • Model the costs of different ways to mitigate the exposure • Consider your Phase IV allocation • Find out what your competitors are doing
  18. 18. Expertise. Integrity. Excellence. Confidential EU Emissions Trading Scheme – policy, prices and risk management Louis Redshaw, Redshaw Advisors Ltd Email: louis.redshaw@redshawadvisors.com Tel: +44 (0)20 3637 1055 Contact us on: +44 (0)20 3637 1055 to find out more about the Redshaw Advisors Carbon Support Program
  19. 19. Expertise. Integrity. Excellence. Confidential www.redshawadvisors.com

×