Analyzing Carbon Trade Permits in Optimization Framework

The threats caused by global warming motivate different stake holders to deal with and control them. This Master's thesis focuses on analyzing carbon trade permits in optimization framework. The studied model determines optimal emission and uncertainty levels which minimize the total cost. Research questions are formulated and answered by using different optimization tools. The model is developed and calibrated by using available consistent data in the area of carbon emission technology and control. Data and some basic modeling assumptions were extracted from reports and existing literatures. The data collected from the countries in the Kyoto treaty are used to estimate the cost functions. Theory and methods of constrained optimization are briefly presented. A two-level optimization problem (individual and between the parties) is analyzed by using several optimization methods. The combined cost optimization between the parties leads into multivariate model and calls for advanced techniques. Lagrangian, Sequential Quadratic Programming and Differential Evolution (DE) algorithm are referred to. The role of inherent measurement uncertainty in the monitoring of emissions is discussed. We briefly investigate an approach where emission uncertainty would be described in stochastic framework. MATLAB software has been used to provide visualizations including the relationship between decision variables and objective function values. Interpretations in the context of carbon trading were briefly presented. Suggestions for future work are given in stochastic modeling, emission trading and coupled analysis of energy prices and carbon permits.

Päästökauppa murrosvaiheessa

Tässä diplomityössä selvitetään EU:n alueella ja erityisesti Suomessa vuoden 2005 alusta alkavaa hiilidioksidin päästökauppaa. Työssä käsitellään päästökaupan tulevia vaikutuksia energia-, metalli- ja metsäteollisuuden kannalta. Myös kansantaloudelliset sekä kokonaistaloudelliset vaikutukset ovat mielenkiinnon kohteena. Työ koskee joiltakin osin myös ilmastonmuutoksen hillintää yleisesti ja ns. Kioton mekanismeja. Työn kuluessa pyritään myös ennakoimaan tulevan päästökaupan volyymia ja päästöyksikön eli hiilidioksiditonnin hintaa, joka on suurimpia epävarmuustekijöitä koko prosessissa. Tulevaa päästökauppaa tarkastellaan myös päästökauppadirektiivin, päästökauppalain ja muiden sitä koskevien lakien säännösten ja määräysten luomassa toimintakehikossa. Työn nimi "Päästökauppa murrosvaiheessa" kuvastaa täten myös sitä, että tarkastelussa ei pyritä välttämättä lopullisiin ja varmoihin tai tarkkoihin arvioihin, koska se on käytännössä mahdotonta. Työn painopiste onkin meneillään olevan päästökaupan valmistelun selvittely monimuotoisena prosessina, jolloin tämän prosessin kuvaus on suurelta osin tässä vaiheessa myös kvalitatiivista. Päästökaupan tulosten ja vaikutusten seuranta jatkossa puolestaan olisi mitä mielenkiintoisin jatkotutkimuksen aihe. Työtä havainnollistetaan kolmella käytännön case -esityksellä, jotka käsittelevät energiayritystä, kattila- ja laitetoimittajaa sekä metsäteollisuuden voimalaitosta, ja niiden varautumista alkavaan päästökauppaan.

Emission Trading and Tradable Green Certificates Impacts on the Business Activity of Vattenfall Oy

Ihmisen toiminnan vaikutus ilmakehään johtaa todennäköisesti ilmastonmuutoksiin. Eräs näistä muutoksista on maapallon keskilämpötilan nousu, joka aiheutuu kasvihuonekaasujen lisääntyneestä pitoisuudesta ilmakehässä. Vaikutusten vähentämiseksi on hiilidioksidipäästöjä vähennettävä. Kioton pöytäkirja asettaa allekirjoittaneille maille päästövelvoitteet. Euroopan unionin tulee vähentää kasvihuonekaasupäästöjään 8%:lla. Eräs vähennysmekanismeista on päästökauppa. Päästökauppa on sekä keino suojella ympäristöä että ympäristöpoliittinen instrumentti kasvihuonekaasupäästövähennysten kustannusten keventämiseksi. Päästökauppa ei suoranaisesti vähennä kasvihuonekaasupäästöjä, vaan tasaa niitä maiden ja laitosten välillä. Uusiutuvan energian käytön edistäminen sekä kansainvälisesti että kansallisesti johtaa suoriin kasvihuonekaasupäästöjen vähenemiseen. Euroopan unionin jäsenvaltiot ovat asettaneet kansalliset viitearvot uusituvan sähkön kulutukselle. Saavuttaakseen nämä viitearvot maiden tulee tukea uusiutuvia energialähteitä eri menetelmin kuten vihreillä sertifikaateilla. Päästökauppa ja kaupattavat vihreät sertifikaatit tulevat vaikuttamaan energiantuottajien liiketoimintaan. Työssä on tutkittu päästökaupan ja vihreiden sertifikaattien vaikutuksia Vattenfall Kaukolämpö Oy:n, Vattenfall Sähköntuotanto Oy:n ja Vamy Oy:n liiketoimintaan.

Small scale energy production in Helsinki Metropolitan area in emission trading point of view

Emission trading with greenhouse gases and green certificates are part if the climate policy the main target of which is reduce greenhouse gas emissions. The carbon dioxide and fine particle emissions of energy production in Helsinki Metropolitan area are calculated in this study. The analysis is made mainly by district heating point of view and the changes of the district heating network are assessed. Carbon dioxide emissions would be a bit higher, if the district heating network is expanded, but then the fine particle emissions would be much lower. Carbon dioxide emissions are roughly 10 % higher, if the district heating network is expanded at same rate as it has in past five years in the year 2030. The expansion of district heating network would decrease the fine particle emissions about 40 %. The cost of the expansion is allocated to be reduction cost of the fine particle emissions, which is considerably higher than the traditional reduction methods costs. The possible new nuclear plant would reduce the emissions considerably and the costs of the nuclear plant would be relatively low comparing the other energy production methods.

The European Union and Assembling Biofuel Development – topological investigations concerning the associations between law, policy and space

Biofuels for transport are a renewable source of energy that were once heralded as a solution to multiple problems associated with poor urban air quality, the overproduction of agricultural commodities, the energy security of the European Union (EU) and climate change. It was only after the Union had implemented an incentivizing framework of legal and political instruments for the production, trade and consumption of biofuels that the problems of weakening food security, environmental degradation and increasing greenhouse gases through land-use changes began to unfold. In other words, the difference between political aims for why biofuels are promoted and their consequences has grown – which is also recognized by the EU policy-makers. Therefore, the global networks of producing, trading and consuming biofuels may face a complete restructure if the European Commission accomplishes its pursuit to sideline crop-based biofuels after 2020. My aim with this dissertation is not only to trace the manifold evolutions of the instruments used by the Union to govern biofuels but also to reveal how this evolution has influenced the dynamics of biofuel development. Therefore, I study the ways the EU’s legal and political instruments of steering biofuels are coconstitutive with the globalized spaces of biofuel development. My analytical strategy can be outlined through three concepts. I use the term ‘assemblage’ to approach the operations of the loose entity of actors and non-human elements that are the constituents of multi-scalar and -sectorial biofuel development. ‘Topology’ refers to the spatiality of this European biofuel assemblage and its parts whose evolving relations are treated as the active constituents of space, instead of simply being located in space. I apply the concept of ‘nomosphere’ to characterize the framework of policies, laws and other instruments that the EU applies and construes while attempting to govern biofuels. Even though both the materials and methods vary in the independent articles, these three concepts characterize my analytical strategy that allows me to study law, policy and space associated with each other. The results of my examinations underscore the importance of the instruments of governance of the EU constituting and stabilizing the spaces of producing and, on the other hand, how topological ruptures in biofuel development have enforced the need to reform policies. This analysis maps the vast scope of actors that are influenced by the mechanism of EU biofuel governance and, what is more, shows how they are actively engaging in the Union’s institutional policy formulation. By examining the consequences of fast biofuel development that are spatially dislocated from the established spaces of producing, trading and consuming biofuels such as indirect land use changes, I unfold the processes not tackled by the instruments of the EU. Indeed, it is these spatially dislocated processes that have pushed the Commission construing a new type of governing biofuels: transferring the instruments of climate change mitigation to land-use policies. Although efficient in mitigating these dislocated consequences, these instruments have also created peculiar ontological scaffolding for governing biofuels. According to this mode of governance, the spatiality of biofuel development appears to be already determined and the agency that could dampen the negative consequences originating from land-use practices is treated as irrelevant.

Carbon pricing and its effect on company profitability

In order to reach the 2°C climate target, the carbon price should rise significantly in order for it to be financially rewarding for companies to reduce their emissions. This research aims to find how a significant increase in the carbon price would affect the profitability of companies. Prior research has not found consensus on how regulatory policies affect companies. This research looks at profitability factors of carbon pricing through a mix of related issues such as the carbon risk, carbon pricing mechanisms and cost pass-through of additional costs. The research is quantitative and examines financial data and emissions data regarding scope 1 and scope 2 emissions on 328 European companies. The data analysis method utilised is a sensitivity analysis conducted as a scenario analysis. Different price increases and cost pass-through rates are tested to see how company profitability is affected. As the companies are distributed between 9 sectors and 53 industries, the results vary. The industries that are found to be affected by an increase in carbon pricing show drastic negative changes in profitability. The results complement prior research identifying the most carbon-intensive industries, but also provide some new insights on industries that may be affected by carbon pricing. Industries related to manufacturing, electricity and energy are partly significantly impacted, but also industries related to tourism and food show potential signs of impact when an increased carbon price is introduced.

Techno-Economic Assessment of LNG and Diesel Production and Global Trading Based on Hybrid PV-Wind Power Plants and PtG, GtL and PtL Technologies

With growing demand for liquefied natural gas (LNG) and liquid transportation fuels, and concerns about climate change and causes of greenhouse gas emissions, this master’s thesis introduces a new value chain design for LNG and transportation fuels and respective fundamental business cases based on hybrid PV-Wind power plants. The value chains are composed of renewable electricity (RE) converted by power-to-gas (PtG), gas-to-liquids (GtL) or power-to-liquids (PtL) facilities into SNG (which is finally liquefied into LNG) or synthetic liquid fuels, mainly diesel, respectively. The RE-LNG or RE-diesel are drop-in fuels to the current energy system and can be traded everywhere in the world. The calculations for the hybrid PV-Wind power plants, electrolysis, methanation (H2tSNG), hydrogen-to-liquids (H2tL), GtL and LNG value chain are performed based on both annual full load hours (FLh) and hourly analysis. Results show that the proposed RE-LNG produced in Patagonia, as the study case, is competitive with conventional LNG in Japan for crude oil prices within a minimum price range of about 87 - 145 USD/barrel (20 – 26 USD/MBtu of LNG production cost) and the proposed RE-diesel is competitive with conventional diesel in the European Union (EU) for crude oil prices within a minimum price range of about 79 - 135 USD/barrel (0.44 – 0.75 €/l of diesel production cost), depending on the chosen specific value chain and assumptions for cost of capital, available oxygen sales and CO2 emission costs. RE-LNG or RE-diesel could become competitive with conventional fuels from an economic perspective, while removing environmental concerns. The RE-PtX value chain needs to be located at the best complementing solar and wind sites in the world combined with a de-risking strategy. This could be an opportunity for many countries to satisfy their fuel demand locally. It is also a specific business case for countries with excellent solar and wind resources to export carbon-neutral hydrocarbons, when the decrease in production cost is considerably more than the shipping cost. This is a unique opportunity to export carbon-neutral hydrocarbons around the world where the environmental limitations on conventional hydrocarbons are getting tighter.

Variation in soil organic carbon and thickness of soil horizons within a boreal forest stand - effect of trees and implications for sampling

Summary