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Capacity markets need to reduce emissions: Aurora

  • : Electricity, Emissions
  • 25/01/28

European capacity markets focus too much attention on fossil fuel-fired plants and not enough on renewable sources of security of supply, according to a report issued by research firm Aurora that was commissioned by campaign group Beyond Fossil Fuels.

Capacity markets in the six European countries that have them — the UK, France, Italy, Poland, Ireland and Belgium — have made payments totalling €89.6bn since a mechanism of this kind was first established in the UK in 2015, the report says. The mechanisms are intended to allow firm sources of generation to remain financially viable, even as increasing intermittent renewable generation reduces the number of hours that these types of plants can run profitably.

Of this, nearly half went to support gas-fired capacity and 8pc to coal-fired plants, although there is some uncertainty over precise amounts because of data unavailability. Nuclear plants, mostly in France, received 12pc of the support, while storage — located mostly in the UK and Poland — took 13pc. Renewables, interconnectors and demand-side response took only 7pc, 5pc and 2pc, respectively.

And 19GW of newbuild gas-fired plants have been funded through the schemes, with another 11GW of newbuild gas-fired plants having been awarded a contract for delivery in the next three years.

Some of the plants will continue receiving funding until the 2040s, Aurora said, putting at risk European states' plans to move towards net zero greenhouse gas emissions.

Payments for some assets in five of the countries studied continue until 2037-43, although France's unique decentralised system does not provide incentives beyond the front year.

Payments to operators of battery energy storage systems (Bess) make up only a small part of the total, even though these units can provide zero-emissions short-term energy storage.

Regulators should set up schemes to prioritise zero-emissions forms of security of supply, the report says. And alternative schemes, such as capacity reserves, in which fossil-fired capacity is kept back to resolve supply-demand imbalances but not allowed to act in wholesale markets, can ensure these plants do not lead to emissions increases.

At the same time, a lack of viable long-term storage options could mean fossil fuel-fired technologies are needed for longer periods. Bess systems too can suffer from an inability to charge during long periods of low renewables output, which prompted Polish grid operator PSE to increase the technology's de-rating in an auction held last year.

Other countries are considering setting up capacity markets, with discussions under way in Spain, Germany and Greece. Spain's planned market, which is under consultation, will allow payments for thermal generators only for a year in advance and in particular circumstances, with only renewables, storage and demand response being eligible for long-term support.

Capacity market spending by technology

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25/02/10

Most nations miss NDC deadline, while ambition varies

Most nations miss NDC deadline, while ambition varies

London, 10 February (Argus) — The majority of countries that are party to the Paris climate agreement have missed the deadline to submit new national climate plans, while research group Climate Action Tracker (CAT) found that several are not aligned with Paris accord goals. Just 12 countries had submitted new climate plans, known as nationally determined contributions (NDCs), by time of writing today — the UAE, Brazil, the US, Uruguay, Switzerland, the UK, New Zealand, Andorra, Saint Lucia, Ecuador, Singapore and the Marshall Islands. UN climate body the UNFCCC had set 10 February as the deadline for countries to submit their third NDCs, setting out climate action and targets up to 2035. CAT said that of the six NDCs it analysed, just the UK's was aligned with the Paris agreement. The UK plan is "about the only bright spot" among the countries it tracks, CAT noted. But it warned that the UK government "has inherited a vast implementation gap" and must take "urgent action" to introduce and strengthen policies to ensure emissions reduction targets are reached. The UK aims to cut emissions by 81pc by 2035, from a 1990 baseline. The country should support its goals with more international climate finance to be "a fully 1.5°C aligned contribution", CAT said. The Paris agreement seeks to limit the rise in global temperature to "well below" 2°C above pre-industrial levels, and preferably to 1.5°C. CAT noted "a significantly more ambitious" target for 2035 from the UAE , compared with its 2030 goal, but flagged the need for details on the country's planned emissions cuts. It noted a "lack of transparency" in Brazil's NDC and found that, despite an increase in ambition, New Zealand's 2035 NDC "falls short". Switzerland's new NDC "is diverging from a 1.5°C aligned pathway", CAT said. And it said that while the US is leaving the Paris agreement, the country"s NDC "can still be a guiding document for the roughly half of the US states who support continued climate action." But many climate policy observers have emphasised that higher ambition and comprehensive plans are far more important than timeliness. The EU, Canada, Mexico and Norway committed to new, Paris-consistent NDCs at the UN Cop 29 climate summit in November. Climate Action Tracker tracks around 40 countries and the EU, covering around 85pc of global emissions and 70pc of global population. The Paris agreement has a ratchet mechanism, which requires countries to review and revise climate plans every five years, increasing ambition. The UNFCCC deadline for NDC submissions is not enforceable. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US rescinds UN climate fund pledges


25/02/10
25/02/10

US rescinds UN climate fund pledges

Washington, 10 February (Argus) — The US has canceled about $4bn in pledged money to the UN's Green Climate Fund, the latest sign a sharp policy shift under President Donald Trump. The State Department late last week said the US "has rescinded outstanding pledges to the Green Climate Fund," but did not provide any further details. The US under former presidents Joe Biden and Barack Obama had pledged about $6bn combined to the GCF, with the most recent commitment announced at the Cop 28 climate talks in Dubai. But the two administrations were able to deliver only $2bn of the funding. The cancellation of the GCF pledges is just the latest step by Trump to quickly reverse course for US climate and clean energy policies. Among his first acts after taking office last month Trump ordered the US to exit the Paris climate agreement and to pause spending on renewable energy projects. In addition, secretary of state Marco Rubio said the US would stop engaging in climate diplomacy. The GCF finances projects in developing and emerging countries with a focus on mitigation, adaptation and resilience efforts, such as climate-friendly agricultural methods, reforestation or coastal protection. It operates under the UN Framework Convention on Climate Change and was originally capitalized with $10.3bn in 2015. In two replenishment rounds since then, it has gathered more than $20bn in additional pledges. The fund has to date approved nearly $16bn for project in more than 130 countries and expects to approve another $3bn-worth this year. The fund said it "remains determined" to help developing countries achieve the highest level of ambition possible. "If pledges are not fully realized, our ability to support the climate ambitions of developing countries will be constrained," the GCF said. Finance for developing countries has been a major issue at UN climate talks. At last year's Cop 29 in Baku, Azerbaijan, countries agreed to a "new collective quantified goal" of "at least" $300bn/yr for developing countries by 2035, with developing countries "taking the lead." The goal is meant to build on the $100bn/yr that developed countries agreed to deliver over 2020-25. The finance will come from "a wide variety of sources, public and private, bilateral and multilateral, including alternative sources". By Michael Ball Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump planning rollout of 'reciprocal' tariffs


25/02/07
25/02/07

Trump planning rollout of 'reciprocal' tariffs

Washington, 7 February (Argus) — President Donald Trump is considering announcing "mostly reciprocal tariffs" on an undisclosed number of countries early next week, in a possible shift from a campaign plan to impose universal tariffs of 10-20pc against all imports to the US. Trump did not provide specifics on the idea, but said he would probably have a meeting on 10 or 11 February before making an announcement. The potential rollout of the reciprocal tariffs appears likely to take place after China's planned 10 February date to start collecting a 10pc tariff on crude, coal and LNG from the US that Beijing imposed in response to a 10pc blanket tariff that Trump has placed on Chinese imports. "I think that's the only fair way to do it," Trump said of his plan to "probably" pursue reciprocal tariffs. "That way, nobody's hurt. They charge us, we charge them. It's the same thing. And I seem to be going in that line, as opposed to a flat fee tariff." Trump has said he views tariffs — which he says is his "favorite word" — as a virtually cost-free way to raise revenue that will cut the US trade deficit and boost domestic manufacturing, without raising prices for goods in the US. But earlier this week, Trump delayed his plan to place an across-the-board 25pc tariff on Canada and Mexico just hours before it was set to take effect, as stock markets began to plunge on the threat of the start of a damaging trade war between the US and its two largest trading partners. The vast majority of economists say across-the-board tariffs are an inefficient way of raising revenue, with costs that would fall the hardest on low-income and middle-income US consumers already reeling from years of inflation. US Senate minority leader Chuck Schumer (D-New York) on 2 February said kicking off a tariff war with Canada and Mexico "makes 100pc no sense" and would raise costs for US consumers. Trump discussed his reciprocal tariff idea today during a press conference with Japan's prime minister Shigeru Ishiba. Trump said he wants to "get rid of" the US' trade deficit with Japan he estimates is $100bn/yr, primarily by selling the country US oil, LNG and ethanol. Trump said he also spoke with Ishiba about efforts related to the "pipeline in Alaska", an apparent reference to the proposed 20mn t/yr Alaska LNG project, which is expected to cost more than $40bn and would require building a natural gas pipeline across Alaska. Ishiba said it was "wonderful" that Trump had lifted a temporary pause on LNG licensing on his first day in office, and said Japan was interested in purchasing US LNG, ethanol, ammonia and other resources as a way to cut down on the US trade deficit with Japan. "If we are able to buy those at a stable and reasonable price, I think it would be a wonderful situation," Ishiba said through a translator. Japan is keen to increase its overall investment in the US to $1 trillion, Ishiba said. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ecuador vows to cut GHG emissions by 7pc in 2035


25/02/07
25/02/07

Ecuador vows to cut GHG emissions by 7pc in 2035

Quito, 7 February (Argus) — Ecuador committed to reduce its greenhouse gas emissions (GHG) by 7pc by 2035 compared with the baseline projected emissions for that year, it said in its second Nationally Determined Contributions (NDC) this week. The reduction is the equivalent to 8.8mn metric tonnes (t) of CO2 equivalent (CO2e). Ecuador emitted 88.3mn t of CO2e in 2022 mainly from the energy sector (47pc), including transportation and power generation; land use (29pc); agriculture (13pc); waste management (6pc) and industrial processes (5pc). If the current trend projected since 2010 continues without any actions, Ecuador's annual emissions will reach almost 130mn t of CO2e in 2035. But by applying mitigation measures such as more renewable energies, sustainable methods of production and mobility, with domestic funding, the emissions will be reduced to about 121.2mn t of CO2e, for a 7pc cut. With more financial support from the international community, Ecuador aims to reduce its GHG emissions by another 8 percentage points. That would cut another 10.6mn t of CO2e, for a total reduction of 15pc and emissions of 110mn t of CO2e in 2035. The mitigation measures will cost Ecuador about $6.5bn. In 2019, Ecuador launched its first NDC and set the goal to reduce GHG emissions by 9pc annually from 2020-2025. But it missed the goal, mainly because the 2020 pandemic generated an economic crisis that cut funds to implement mitigation measures. By Alberto Araujo Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Australia’s Orica mulls selling safeguard carbon units


25/02/07
25/02/07

Australia’s Orica mulls selling safeguard carbon units

Sydney, 7 February (Argus) — Australian chemicals and explosives firm Orica is eligible to receive safeguard mechanism credits (SMCs) for the July 2023-June 2024 compliance year and is now considering options for the units, including potential sale to a third party, it told Argus . Orica did not disclose how many SMCs it was eligible to receive or whether the units have already been issued. It has two facilities under the scheme — Kooragang Island in New South Wales (NSW) and Yarwun Nitrates near the Queensland state city of Gladstone. SMCs are issued if a facility reports scope 1 greenhouse gas (GHG) emissions below its baseline. Orica said in November that it did not expect a requirement to surrender Australian Carbon Credit Units (ACCUs) for the July 2023-June 2024 compliance year. It still does not expect such a requirement, it told Argus on 6 February. Both the company's facilities are registered as carbon projects, and Orica received a total of nearly 600,000 ACCUs from the Kooragang Island decarbonisation project last year . The credits are generated as a result of tertiary emissions abatement reactors installed across three nitric acid plants at the facility, which includes ammonia and ammonium nitrate plants. "In line with Orica's carbon market strategy, we anticipate holding originated ACCUs for future safeguard mechanism compliance obligations," the company told Argus on 6 February. SMC data expected for early March The Clean Energy Regulator (CER) earlier this week said it issued the first ever SMCs into eligible accounts in the new registry that will replace the Australian National Registry of Emissions Units (ANREU). It did not say how many SMCs have been issued so far but noted that further issuances are likely this month. "The CER will publish the 2023-24 safeguard data, including facility-level information about SMC issuances, by 15 April 2025," it told Argus on 7 February. "The CER will also start to include SMC observations in its quarterly carbon market reports." The quarterly report for the fourth quarter of 2024 is expected to be published in early March, the regulator added. The main data for that period was published in late January, showing ACCU supply and demand at new highs . Market participants said no SMC trades had been seen so far, although some companies have been exploring potential sales. Now that the first SMCs have been issued, account holders with SMCs in their accounts are already able to transfer the units between accounts, the CER noted. Australia's Climate Change Authority (CCA) said late last year that 60 out of 215 facilities covered by the safeguard mechanism reported scope 1 GHG emissions below their baselines and could be eligible to apply for a total estimated 9.2mn SMCs , far higher than previously estimated, impacting market sentiment for ACCUs. Spot prices for generic ACCUs ended the week below A$35 ($22), down slightly on the week and compared to levels close to A$43 in mid-November. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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