1. Climate change and Emission trading. Tool of investment

2. Reducing of CO2-Emissions
How can the government provide reduction of emissions?
Governmental requirements and orders
Market-orientated solutions
Subsidies
Taxes
Certificates
Climate change and Emission trading. Tool of investment.

3. Emission Trading in the EU
Cap and Trade system
Cap: a certain amount of CO2-emissions for every member state
Allocation (and/or auction) of CO2-certificates (=permits) among the emitters exceeding a certain size
Trade: market participants can deal now with the certificates to each other
Price formation for certificates
Climate change and Emission trading. Tool of investment.

4. Emission Trading in the EU
Supply and demand of certificates depends of the marginal abatement costs of the individual company
Companies with low abatement costs reduce their emissions and sell certificates and vice versa
Companies with high abatement buy certificates
Climate change and Emission trading. Tool of investment.

5. Climate change and Emission trading. Tool of investment.
Emission Trading, why?
Important Features
Economical efficiency
If there are no market defects, you reach your aim to the minimum costs for the society
Ecological effectiveness
Because of a predefined cap you definitely reach the aim
Climate change and Emission trading. Tool of investment.

6. Climate change and Emission trading. Tool of investment.
Problems?
Baseline-problem
How to set the cap
How to allocate the permits
Control and transaction costs
Hot Air - problem
Climate change and Emission trading. Tool of investment.

7. Climate change and Emission trading. Tool of investment.
The TIMES-Model
Linear optimisation models
Meta language for an efficient developing of energy models
Consists of two parts:
Reference Energy System (RES)
Description of all possible energy, material and cash flows
Description of all possible storage, conversion and transmission processes
Values
Prices and costs for specification of the processes
Exogenous requirements
Climate change and Emission trading. Tool of investment.

8. Climate change and Emission trading. Tool of investment.
Investigation area
Greifswald, a middle-sized city in the northeast of Germany
~ citizens
Main employer is the old university
Hardly any industry
Supply with electricity, district heat and gas is done mainly by the public services
Electricity and district heat are produced by modern combined-heat-and-power plants (CHP)
Heat demand is satisfied:
45% by district heating (gas)
45% by decentralise gas heating
Rest is spread among oil, liquid gas, coal, wood
Climate change and Emission trading. Tool of investment.

9. Climate change and Emission trading. Tool of investment.
SOL
WIND
OIL_G
GAS_G
GAS_P
OIL_P
COL
ELC
IMPORT_NRG
_WORLD
DHEA_CHP_1-2
CHP_PL_1
CHP_PL_2
OIL_HEA
WIND_PL
SOL_PL
HEA
GAS_HEA
COL_HEA
ELC_HEA
HEAPU_HEA
HEAPU_DHEA
BUILD_TYP_1
HEA_LIV_SP
ENV_GREIF
NO_RECON
WINDOWS_RECON
WALL_RECON
FULL_RECON
CO2
ROOM_HEA
HOUSEHOLDS
HOUSING
CO2_CER
_SUPPLY
CER_FREE
CER_BUY
_EXPORT
Climate change and Emission trading. Tool of investment.

10. Climate change and Emission trading. Tool of investment.
Work status
The Greifswald-Model is in a very early development stage
We hope, that it will be a tool, to get creative and new solutions for energy supply and climate protection
For the future, we want to link the energy-model with a regional-economic-model to forecast the effects of emission trading and climate protection to economy
Climate change and Emission trading. Tool of investment.

11. Climate change and Emission trading. Tool of investment.
Example I
Good Visualisation of the right time for insulation and reconstruction processes
Different scenarios for different basic conditions
Climate change and Emission trading. Tool of investment.

12. Climate change and Emission trading. Tool of investment.
Example II
By a high certificate price, it can be profitable for an heat supplier to invest in energy saving measures by customers
Profit of selling certificates can be higher then costs for energy saving
Climate change and Emission trading. Tool of investment.

13. Climate change and Emission trading. Tool of investment.
Emission trading will accelerate investments when certificate price increase
Permits have to be shorten by and by
Problem: Maybe it comes to a relocation to smaller systems which are not involved in emission trading
Climate change and Emission trading. Tool of investment.

14. Thank you for your attention!!!
Climate change and Emission trading. Tool of investment.