SHARE
01865 952 700 | contact@auroraer.com
Press enquiries

Insight

Home/Valuing Carbon: Long-term outlook for carbon price formation and implications for the power sector

Valuing Carbon: Long-term outlook for carbon price formation and implications for the power sector

We are pleased to present Aurora’s new strategic insight report, Valuing Carbon: Long-term outlook for carbon price formation and implications for the power sector. The report presents our findings on the latest policy and market updates in the energy sector and their implications for the power sector in the coming years.

Key messages to arise from our analysis are:

  1. The EU ETS was introduced as part of the EU Climate Change package to encourage fuel switching and investment in low carbon technologies through a stable carbon price signal.
  2. Price of EUAs has risen to a 10-year high due to upcoming Phase IV reforms, rise in gas prices, a European-wide heatwave, a change in trading strategies by large generators and more active management of EUAs by small industry players.
  3. Aurora forecasts the price of EUAs to average €26/tCO2 over Phase IV, with ~500Mt of allowances banked for Phase V.
  4. Price evolution of EUAs will critically depend on fuel prices and national policies of Member States. Tightening the ETS cap is effective in phasing out coal while more ambitious national policies alone are unlikely to deliver 55% emissions cut.
  5. Uncertainty over future GB carbon prices raises significant questions for market participants. Reducing the carbon price from current levels could undermine the Government’s target to phase out coal by 2025.

Not a subscriber? Get more information here.

View Analysis

Our subscription services

Our subscription service provides you with long-term market forecasts, strategic insight reports, interactive client forums and access to our market data and analytics platform.

Interested? Please sign up to receive our complimentary monthly summary reports via email. Simply tick which reports you would like to receive. Please indicate your consent in the box provided and view our privacy policy.

If you would like further information on a particular subscription service or report please enter further information in the box provided.

 

 

  • Please find our privacy policy here

  • Aurora’s Flexibility Market Summary provide a concise monthly review of recent events in key markets for flexible technologies. The initial focus is on the balancing mechanism and firm frequency response (FFR) markets with more ancillary services markets to be added over time.

    Read More
  • Aurora’s System performance report provides a monthly snapshot of key operating characteristics for the GB power system. Which fuels are most used? Which power plants most profitable? How would a change in the price of gas or coal impact the system price through the dispatch?

    Read More
  • This forecast presents a deep and comprehensive overview of the GB power market, including fully detailed descriptions of energy and climate policies, generation technologies, demand, and fuel prices.

    Read More