Back
CEZ Group
...
Media Nuclear Power Plant news

16. 1. 2006

Others

CEZ has entered in the ECX, Amsterdam exchange of CO2 allowances

Yesterday CEZ Power Company made first deals on the ECX, Amsterdam exchange of CO2 allowances. This exchange trades the most CO2 allowances and reaches the highest turn-over in Europe.

„We continue to develop our know-how in the area of CO2 emissions trading. We have been trading carbon emissions since the very start of this mechanism last year. The direct access to the exchange guarantees us the best prices and the lowest transaction costs,“ said Alan Svoboda, Member of the Board and director of CEZ Trade and continued: „We continue buying and selling allowances bilaterally, pursuant to framework agreements, as well as through brokers. Continuously we are concluding framework agreements with other power and financial subjects. We have already entered into nearly 15 framework agreements with the biggest European carbon emissions traders. We also offer our know-how and infrastructure to other parties in the Czech Republic that are interested in selling or buying allowances through brokerage services.“ There is a number of subjects on the Czech as well as other markets where CEZ is trading which hold emission allowances and which need to buy some more or, on the contrary, sell their allowances in view of their production cycle and technical and cost parameters. This mechanism is the nub of the European system with emission allowances being a cost factor motivating firms to reduce polluting production and invest into more modern and cleaner technology. At the same time, they can set off the lost gains and capital costs. In some cases the subjects need to buy allowances in addition due to increases in the volume of their production and consequently in higher emissions. These firms, however, do not own business technologies, knowledge and means necessary for access to the European emission allowances market. As CEZ has this business infrastructure, it is ready to offer its services to these subjects. Considering the total balance of allocated allowances in the Czech Republic, this is only a supplementary service for business partners and customer of CEZ.

„The mechanism of emission allowances, as it was designed, influences the production mix of resources and indirectly the price of electricity. Trading of emission allowances is a logical part of the organization of the production resources portfolio. Despite that, CEZ´s primary operation is still production, trade and sale of electrical power. This year CEZ is likely to surpass its record volume of production from the previous years. We prospered from selling a part of the allocated volume at the time when the price of allowances was high. At the end of the year, on the contrary, we were buying for lower prices. At the same time we sold additional electricity volume from our own resources on the market. We estimate that this year our balance of allowances will be more or less even. Already next year, however, we might lack allowances. We expect our resources to operate at full output, because they will make up for the shut-down in Slovakia. We will have to buy more allowances or gain them from the JI/CDM* projects, which we are implementing“ said Alan  Svoboda.

The prices of emission allowances in the recent months have been fluctuating in the range of 20-23 EUR per a ton. The volatility of the prices has been given by variations in offer and demand and by market response to important events on power markets. The future development of the price depends mainly on the total European balance of this system.

Ladislav Kriz, press officer CEZ

JI/CDM projects – these are world projects where investors gain allowances saved in case that their firm invests in countries (which signed Kyoto Protocol) outside the EU into emission economies – example: a company invests into a 2 per cent increase in efficiency of a Chinese power plant, into a construction of a wind-power farm etc., and can gain allowances saved there.