The climate spread

With electricity generating sources contributing the majority of emissions covered under the EU ETS, it is useful to understand the price drivers of the sector and the relationship between the price of carbon and the price of fuel inputs (i.e. coal and natural gas). On average, coal is 2.5 times more CO2 intensive, or ‘dirtier’, than natural gas. That is, for the same amount of electricity generation, a coal-fired generator would need 2.5 times more compliance instruments than the gas-fired generator for the same output.

Power generators, especially those operating in areas where coal-fired generation is common, are closely watching their clean dark spreads and clean spark spreads. The clean dark spread ...

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