Washington, D.C., Oct. 17, 2005 — ICF Consulting announced the launch of its proprietary, new International Carbon Pricing (InCaP) tool, to assist companies with their mid- and long-range emissions strategies. InCaP allows firms to develop international carbon market scenarios and determine how changes in key variables are likely to affect the future price of CO2 allowances and credits. Insights from InCaP help firms position themselves to manage financial exposure given the forecasted market price range. Powered by economic fundamentals, market research, and the strength of ICF Consulting’s suite of proprietary and licensed energy sector models, InCaP gives firms the fundamental information needed to analyze and create risk management strategies in today’s carbon constrained environment.
Earlier this year, the European Union’s Emission Trading Scheme (EU ETS) commenced and companies are watching the largest multi-country greenhouse gas (GHG) trading system with great interest. Ratification of the Kyoto Protocol has made it evident that international emissions trading will play a significant role in meeting industry and national GHG targets. The prospects for buying and selling GHG emission reductions in an international market offer new risks and opportunities for businesses.
“Although countries vary in their level of preparations for the global carbon market, the implications for everyone in the business community are substantial,” says Skip Willis, managing director of ICF Consulting’s Canadian operations.
“Understanding the factors that will move the market for carbon permits and the nature of the risks companies face in complying with carbon constraints is essential for management planning in the coming years,” says Melinda Harris, an ICF Consulting senior economist.
InCaP is being used by firms throughout North America and Europe to evaluate opportunities and risks in future carbon markets. In a recent application, ICF Consulting used the tool to generate estimates of the costs to the firms comprising Canada’s Large Final Emitters group, who are expected to contribute 45 Mt of reductions through 2012. The findings indicated that the cost to these firms is likely to approach $3 billion. Potentially critical factors such as access to credits from the Clean Development Mechanism, purchases by non-Canadians of surplus Assigned Amount Units from countries with economies in transition, and the speed and cost-effectiveness with which reductions can be obtained in the energy sectorà¯¿½could push costs considerably higher or lower. In Europe, InCaP has been used to support investment decisions for several new gas-fired power plants in Europe and to explore the impact on price of including the aviation sector in the EU ETS.