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The Impact of CO2 Reduction Measures on Energy Trade

Published in 2006

The Impact of CO2 Reduction Measures on Energy Trade

Over the past few years, the linkages between energy and environment have become a topic of major interest. With the entry into force of the Kyoto Protocol in February 2005, the carbon trading mechanisms of the Kyoto Protocol became a functioning part of the international response to concern over climate change. Since most countries of the Energy Charter constituency have ratified the Kyoto Protocol, the implementation of the CO2 reduction measures and the carbon trading mechanisms are becoming increasingly relevant to our member states.

The present report focuses on macroeconomic impacts of CO2 reduction measures and resulting changes of fuel choice and energy flows. The work benefited from the discussions in the Group on Trade and Transit as well as from comments by member states and the International Energy Agency.

The report starts with an update on the initial EU Emissions Trading System (ETS), the plans to establish similar systems in non-EU countries, and the linkage of project mechanisms with the EU Emission trading system. It goes on to analyse the potential impacts of emissions reductions measures and emission trading on fuel-mix, energy-intensive products and cross-border flows of energy.