Document summary
The phase-out of free CO2 rights in 2013 is set to increase utilities sector CO2 costs to €17.6bn p.a. at current CO2 prices, presenting new challenges for European utilities, additionally hitting electricity utilities. The outperformance of a number of low-carbon generators shows a strong positive correlation to CO2 prices post 2006. CO2 intensities are down but so are green investments. France, Italy and the UK have placed demand-side energy saving obligations on electricity and gas suppliers creating the risk of costs/penalties for non-compliance and demand destruction. The European Commission is to push member states to adopt similar schemes.