SHORT-TERM CO2 ABATEMENT IN THE EUROPEAN POWER SECTOR: 2005–2006

This paper provides an estimate of short-term abatement of CO2 emissions through fuel switching in the European power sector in response to the CO2 price imposed by the EU Emissions Trading Scheme (EU ETS) in 2005 and 2006. The estimate is based on the use of a highly detailed simulation model of the European power sector in which abatement is the difference between simulations of actual conditions with and without the observed CO2 price. We estimate that the cumulative abatement over this period was about 53 million metric tons. The paper also explains the complex relationship between abatement and daily, weekly, and seasonal variations in load, relative fuel prices, and the price of CO2 allowances.