The impacts of EU CO2 emissions trading on electricity markets and electricity consumers in Finland

Mikko Kara (Corresponding Author), Sanna Syri, Antti Lehtilä, Satu Helynen, Veikko Kekkonen, Maija Ruska, Juha Forsström

Research output: Contribution to journalArticleScientificpeer-review

114 Citations (Scopus)

Abstract

In this paper, the likely impacts of the EU emission trading system on the Nordic electricity market and on the position of various market actors are assessed. In its first phase, the EU CO2 emission trading system includes power plants with thermal capacity greater than 20 MW, metals industry, pulp and paper industry, mineral industry and oil refineries. This paper describes the assessment done for the Finnish Minister of Trade and Industry, analysing the likely impacts on power plant operators, on energy-intensive industries, on other industries and on other consumer groups. The impacts of emissions trading were studied with the VTT electricity market model and with the TIMES energy system model. The annual average electricity price was found to rise 0.74 EUR MW h− 1 for every 1 € tonne CO2−1 in the Nordic area. Large windfall profits were estimated to incur to electricity producers in the Nordic electricity market. In Finland, metals industry and private consumers were estimated to be most affected by the electricity market price increases. Expanded nuclear power generation could limit the increases in the prices of electricity to one-third compared to those in the base case.
Original languageEnglish
Pages (from-to)193 - 211
Number of pages19
JournalEnergy Economics
Volume30
Issue number2
DOIs
Publication statusPublished - 2008
MoE publication typeA1 Journal article-refereed

Keywords

  • Nordic electricity market
  • Investment
  • CO2 emission
  • Windfall profit
  • Industry
  • Domestic sector

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