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Carbon, oil and coal

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As part of Aurora’s integrated modelling of global energy commodities, we provide a detailed carbon, oil and coal market modelling.

By capturing substitution effects between energy commodities and creating scenarios that reflect potential future differences in key variables (such as slow growth in China and fast action on global carbon pricing), we provide a comprehensive outlook for carbon, oil and gas to 2040 on a regional basis.

In addition, Aurora’s commodity modelling is integrated with our power market modelling. This allows us to provide high quality strategic advice on a range of issues for coal and gas generators across European markets and globally. For example, we have worked with a number of oil and gas majors to provide the underlying modelling for their global energy forecasts over the last two years.

Oil and coal supply

Aurora’s granular oil and coal extraction cost curves capture the levelised upstream costs. These cost structures include technological improvements and dynamic input costs, allowing us to build a detailed view of global supply by region. Updated on a quarterly basis, these reflect the on-the-ground realities in coal producing regions.

Oil and coal demand

By building a detailed view of region-specific demand profiles, Aurora’s global energy commodity models provide deep, timely insights into shifts in demand in key regions. For example, Aurora has closely monitored trends in Chinese and European coal-to-gas switching to help project relative coal and gas demand, which have been built into our suite of models.

Oil and coal price

Based on our supply and demand analysis and modelling, Aurora can deliver regional oil and coal price forecasts to 2040 based on market fundamentals. By actively tracking the impact of major policies, events, technologies and trends that impact coal consumption, the demand projections within our models and forecasts are updated on a quarterly basis. In addition, we test our central forecast through P90/10 scenario analysis, as well as shifting fundamental underlying assumptions to test their impact on regional prices.

Implications for carbon markets

Aurora has developed deep expertise in projecting carbon emissions under a range of future energy scenarios. This carbon modelling is tightly linked to our coal, oil and gas projections, as well as our industry-leading power market modelling.

For example, recently Aurora conducted detailed analysis to understand the carbon emission impact of alternative nuclear and battery penetration scenarios in the GB power system.

In addition to this, Aurora also has a team dedicated to review the impact of carbon policies and pricing on energy markets. For example, Aurora has created detailed alternative scenarios to the Department of Business, Energy & Industrial Strategy’s energy and emissions projections for future GB carbon prices, as well as mapping the implications of Brexit on GB and European carbon prices.

Get in touch for more information about how we can help you.

Aurora provides profound insight, understanding and analysis of the economics of energy markets