Carbon dioxide (CO2) energy production
90% of Nuon’s CO2 emissions are released during the production of electricity. Our CO2 reduction measures include emissions trading, technical changes and biomass co-gasification.
CO2 emissions trading
Market developments in 2006
Nuon’s CO2 trading portfolio in 2006
CO2 emissions trading
With the ratification of the Kyoto protocol, numerous national governments around the world have entered into a binding commitment to reduce greenhouse gas emissions between 2008 and 2012. The target for the Netherlands is to bring these emissions down to below the level of 1990. To achieve their targets, governments must take measures in their own country. In addition, they can invest in foreign greenhouse reduction projects, either in other Kyoto signatories (Joint Implementation, JI) or in countries with no greenhouse reduction commitment (Clean Development Mechanism, CDM).
In Europe the European Union plays a central role in the realisation of the EU member state’s Kyoto targets. All large incineration plants in the European Union have been allocated an EU emission allowance(EUA). These include Nuon’s power stations. If a plant’s emissions exceed the allowance, the owner must buy rights. If less emissions are produced, rights can be sold. Penalties are imposed on owners who fail to comply.
The CO2 rights trading system within the EU is being introduced in two phases. The first period (2005 – 2007) is generally regarded as a test period. The second period (2008 – 2012) coincides with the period of the Kyoto protocol. The prices for these two phases are developing relatively autonomously in the trading market.
Market developments in 2006
2006 was an eventful year in the CO2 emissions trading market. After rising steadily for the period 2005 to 2007, prices collapsed in April and the rights lost more than two thirds of their value within a few days. This sharp fall was precipitated by a statement from the NEA (Netherlands Emissions Authority) asserting that the Netherlands had a surplus of rights rather than a deficit. Later, other member states sketched a similar national picture. After publication of the current emissions values for 2005, prices recovered slightly. But in 2006 the market remained volatile. In November the EU announced that the national emissions allocation plans for the 2008 – 2012 period would be reviewed for a number of member states. This news probably helped to push up prices in that period.
In 2006 Nuon fully complied with its obligations under the EU ETS, including the verification and monitoring rules. In addition, Nuon made investments in its production facilities in order to improve its electricity efficiency and thus reduce the CO2 emissions per MWh. In 2006 the power station in Velsen was overhauled.
Nuon’s CO2 trading portfolio in 2006
In 2006 our Clean Development Mechanism portfolio was diversified and is now less dependent on a single technology. In 2006 the first rights from our CDM projects were delivered.
In the past year further studies were carried out into the possibilities for starting up projects for treating industrially polluted organic waste water. In many developing countries the treatment of organic waste water is not obligatory. As a consequence, this waste water is simply discharged into the surface water in e.g. lagoons, thus impairing the water quality and causing methane emissions. Methane is a strong greenhouse gas. The use of a biodigester for this kind of industrial waste water can prevent these emissions. The captured methane can even be converted into electricity with the aid of a generator. In view of the positive outcome of the study, there is the intention to cooperate with local industries in a number of countries.
