Halden and the Kyoto mechanisms
The Halden environment and the Kyoto mechanisms
Based at the Institute for energy technology (IFE), Norway’s second largest research institute, the Halden environment developed the world’s first energy exchange system for market based energy trading back in 1991. This later formed the basis for delivery of energy exchanges and energy-related trading systems to a number of countries and larger energy corporations, both in the Nordic countries and world wide. This includes deliveries to energy exchanges and energy companies in North America, Asia and Australia as well as in Europe. Energy production is the largest source of greenhouse gas emissions and is responsible for around 50% of global emissions. Therefore, there is a strong connection between energy production and greenhouse gas emissions. The Halden cluster’s connections within the international energy sector thus constitutes an excellent platform for further growth based on research, education and development of products and services relating to the Kyoto mechanisms. The strong connection between energy trading and the use of the Kyoto mechanisms as means of reducing emissions forms the basis of the ARENA Environment-Friendly Energy Trading project.
Actually, the Halden cluster has produced the world’s first system for emission allowance trading, with the first allowance exchange transaction under the Kyoto Protocol being traded by Electricité de France in London (EDF – one of Europe’s largest energy companies) via the Nordic power exchange Nord Pool and through trading systems developed and delivered by the Halden cluster. Another relevant point is that EDF, having participated for a number of years in the OECD Halden Project through its connections to the Institute for energy technology (IFE), also has established client relations with other companies of the Halden cluster originating from the Institute. This is a good example of how the IFE network has been used to establish new industry-related activities. However, the potential of this international network is far greater than what has been utilized so far. One of the main goals of the ARENA Environment-Friendly Energy Trading project is to promote more extensive use of this network for business, research and education.
The Halden cluster has a strong position within this area and seeing this in relation to Norway’s ambitious climate plan, as presented by Prime Minister Jens Stoltenberg in April 2007, this highlights the scope and the importance of the Kyoto mechanisms. The Norwegian climate plan consists of the following key issues:
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Norway is committing itself to cut greenhouse gas emissions by 30% by 2020.
- Norway will take responsibility to reduce its greenhouse gas emissions outside the country equivalent to 100% of Norway’s own emissions by 2050.
- This means that Norway has to buy emission allowances corresponding to its total greenhouse gas emissions, thereby making the nation emission neutral.
Issue no. 3 leaves no doubt as to the importance of emission allowance trading in a Norwegian context.
If we also consider:
This all signifies a great future need for R&D and education, and a corresponding need for products and services related to both energy and emission allowance trading over the next few years.