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The Effect of Emission Trade on Biofuels Markets in the Baltic Sea Region

The Effect of Emission Trade on Biofuels Markets in the Baltic Sea Region. Satu Helynen VTT, Jyväskylä, Finland Kääriku, Estonia, August 27, 2007. New Bioenergy Business During Emission Trading ET-BIOENERGY.

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The Effect of Emission Trade on Biofuels Markets in the Baltic Sea Region

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  1. The Effect of Emission Trade on Biofuels Markets in the Baltic Sea Region Satu Helynen VTT, Jyväskylä, Finland Kääriku, Estonia, August 27, 2007

  2. New Bioenergy Business During Emission Trading ET-BIOENERGY Project part-financed by the European Union (European Regional Development fund) within the BSR INTERREG III B Neighbourhood Programme. Objectives: → to define a set of best business practices for international bionergy trade, whether in the form of fuel, energy (electricity), or emission allowances → to assess the regional socio-economical impacts of the most promising options → to assess the suitability of new business concepts in different countries → to improve the general awareness of private investors and local actors and to find feasible solutions attractive to them → to create tentative investment programmes for the case regions → TO INCREASE BIOENERGY CO-OPERATION AND INTERNATIONAL TRADE IN THE BSR, AND TO BOOST LOCAL ECONOMIES

  3. PROJECT PARTNERS: VTT Processes, Finland University of Jyväskylä, Finland Tallinn Technical University, Estonia FNR, Germany EC BREC/IBMER, Poland BIOP Institute, Germany Vapo Oy, Finland AS Tootsi Turvas, Estonia FINANCERS: INTERREG IIIB National and local authorities in each country

  4. Number of plants in the emission trading system in each BSR country 2005-2007

  5. Number of shared allowances in each BSR country 2005-2007

  6. The Price of Emission Unit Allowances has decreased since the start of 2006 over 20 €/t CO2

  7. Fuel prices during emission trading (5-20-40 €/ton CO2) in Finland in power production

  8. Renewable energy sources in some BSR countries Finland – in total 8.9 Mtoe (source: Statistics Finland, Eurostat) Germany – in total 13.8 Mtoe (source: FNR, Eurostat) Poland - in total 4.3 Mtoe (source: ECBREC / CLN, Eurostat) Estonia – in total 0.7 Mtoe (source: TTU, Eurostat)

  9. Share of bioenergy in the beginning of 2000’s

  10. Share of RES-E Source: Eurostat

  11. 120 Feed-in tariff Cerificates/subsidy Market price 100 80 60 EUR/MWh 40 20 0 Finland Sweden Lithunia Estonia Germany, 5-20 MW Poland Latvia Germany, 5-20 MW CHP Examples on Prices on Electricity Generated by Wood Fuels

  12. Background report connected to the decision of the binding target 20 % RES to 2020 in EU

  13. Total RES-E in 2001 and additional potential for bioelectricity according fo FORRES

  14. Total RES-H using biomass in 2001 and additional potential for 2020 according to FORRES 18 16 Biomassa 2001 14 12 10 Mtoe 8 6 4 2 0 Tanska Suomi Saksa Ruotsi Viro Latvia Liettua Puola

  15. Calculation of production costs of heat and electricity in each country for chosen plants • Investment estimations for similar plants in each country • Comparison of the heat and electricity production costs • Case 1: District heating plant, 5 MW, peak load utilization 5000 h/a • Case 2: CHP plant, 17 MWe / 40 MWth, peak load utilization 6000 h/a • (Case 3: CHP plant, 3.5 MWe / 16 MWth, peak load utilization 6000 h/a)

  16. Large variations in heat production costs because of differences in investment and fuel costs

  17. Local conditions have a great impact on the electricity production costs

  18. Structure of production costsHeat production – CHP (combined heat and power prodction)

  19. The EU member states are currently preparing the national allocation plans for the second trading period 2008-2012 • The national allocation plans were due to be submitted to the Commission by end of June 2006 • Estonia was the only country in time • On Wednesday 29 November 2006 the Commission is scheduled to take its first set of decisions on national allocation plans submitted • This first set of decisions will concern 11 countries: France, Germany, Greece, Ireland, Latvia, Lithuania, Luxembourg, Malta, Slovakia, Sweden and the United Kingdom. • The commission emphasizes that the allocation for 2008-2012 should be in line with the verified emissions in 2005

  20. THANK YOU FOR YOUR ATTENTION! Pirkko Vesterinen pirkko.vesterinen@vtt.fi ET-Bioenergy project New Bioenergy Business During Emission Trading Co-financed by EU BSR INTERREG III B NP

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