Abstract for: A system dynamics model for assessing the UK carbon market

The emissions of greenhouse gases have become a great worldwide concern due to their effects on climate change. This led to determine, through the Kyoto Protocol, goals to decrease at least 5% of the GHGs by 2012, with respect to the 1990 levels. This agreement established three explicit mechanisms: joint implementation, clean development mechanism and emissions trading. In this context, the European Union created an Emissions Trading Scheme – EU ETS (EU Emissions Trading Scheme) – that committed 73% of the global carbon market in 2009. Given that the electricity sector is the main contributor of GHGs, it is important to assess the impact of the EU ETS on this sector. This article undertakes this task with the support of a system dynamics model, using the United Kingdom as a case study. Preliminary results indicate that even under a scenario of low prices for emission allowances this would induce significant changes in the installed capacity of the electricity sector, replacing fossil-based technologies by cleaner ones, such as wind and nuclear energy; and also significant reductions of CO2 emissions.