Post-Kyoto Scenarios

Written on January 29, 2007 by Javier Carrillo in Environment

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Dr. Javier Carrillo Hermosilla, Executive Director of the Centre for Eco-Intelligent Management
The Centre for Eco-Intelligent Management at the Instituto de Empresa, in collaboration with the PwC & IE Centre for Corporate Responsibility, has recently published a report entitled The competitive environment of the European electricity sector in the post-Kyoto scenarios. This study shows how the uncertainty associated to the absence of a post-Kyoto regime regarding Greenhouse Gas mitigation is affecting investments in mitigation activities in the EU electricity sector and, thus, future emissions levels. Based on a wide survey of EU power companies, the paper identifies the most likely post-Kyoto scenarios considered by these firms and how they are coping with such uncertainty in their current investment decisions. The major conclusion is that the non-existence of a post-Kyoto regime is having a negative effect on current business investment decisions in mitigation activities, increasing risk premiums and financing costs. All in all, the companies surveyed foresee post-Kyoto compliance regimes with emissions trading systems that would guarantee the continuity of the value of the reductions made beforehand, although they differ in their perceptions of the form that a post-Kyoto regime could take.
The authors are grateful to PricewaterhouseCoopers Spain for providing financial support for the project on which this paper is based.
Download a preliminary report here


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