The answer to that question is in a continuous process of being decided — by policymakers with widely diverging opinions, by markets already functioning to equilibrate supply and demand of emissions allowances, and by the energy industry that must respond to the challenge of a lower-carbon future.

Governments concerned about global warming are pushing forward agendas to limit greenhouse gas (GHG) emissions, the large majority of which is CO2 resulting from the combustion of fossil fuels. Countries committed to the limits imposed by the Kyoto Protocol — likely the most ambitious and expensive environmental initiative ever proposed — are taking actions to limit their own emissions while driving GHG reduction investment in the developing world through project-based reduction mechanisms. Even within the key Kyoto holdout countries there are important regional initiatives to limit GHG emissions and ongoing debates on the federal level about the appropriate course of action. The recent trend, as evidenced by the implementation of the European Emissions Trading System and with the Kyoto Protocol going into effect, is toward ever-increasing activity to stem the growth of emissions.

Building on the success of the U.S. SO2 Title IV Emissions Trading Program, policymakers are turning to market mechanisms to ensure that emissions reductions are achieved at the lowest possible cost. In the end, such markets differ from more traditional markets in that the product — namely, the right to emit GHG — has a value entirely linked to governments’ decisions on desired reductions. Policymakers choose what types of reductions are desired (if any), how these would be incentivized (command-and-control regulation, targeted subsidies, cap-and-trade programs, government-funded research, etc.) and when they would be required. Once implemented, these policy decisions provide the rules of the game, the structure needed for the relevant markets to operate and the relevant sectors to appropriately respond.

Greenhouse Gas Emissions combines a thorough assessment of the existing and prospective policymaking drivers with extensive experience and understanding of the underlying emissions fundamentals involving fuel choices, technology developments and economic growth around the world. Through comprehensive reports and a customized Web portal, which features extensive databases, Greenhouse Gas Emissions provides far-reaching geographic scope with special focus and capabilities regarding GHG emissions and markets. Recognizing that there are a number of different GHG regulatory frameworks and individual national and regional priorities, PIRA tracks the likelihood and potential for linkages as well as emerging competing approaches. Understanding the fundamentals of GHG markets also provides additional insight into markets for the primary fossil fuels (coal, gas and oil), as well as for electricity (regarding prices, incentives for new generation) and is critically important to energy-intensive industries such as refining, chemicals, cement, energy production, iron/steel and pulp/paper.

PIRA’s Greenhouse Gas Emissions Service provides critical analysis on:

• Summary and Scoreboard - A summary of the monthly report and a quick-reference scoreboard.
  
  
• Monthly Developments - An updated supply/demand balance for ETS emissions allowances that assesses:
  
  
• Power Sector Emissions - Leveraging its analysis of European electricity markets, PIRA focuses on power sector emissions from coal, natural gas and oil. The section includes analysis of overall demand, weather effects, inter-fuel substitution and renewable generation.

• Industrial Emissions - A review of trends in emissions from other sectors covered by the European ETS — refining, cement, iron/steel, pulp/paper and others — within the context of overall macroeconomic and industrial developments.
  
  
• CDM/JI Prospects - An assessment of the potential supply of emissions credits from CDM/JI projects for ETS compliance.
  
  
• Allowance Price Outlook - While commenting on current market prices, PIRA provides forecasts of allowance prices, given the expected balances and integrated PIRA forecasts of coal, gas, and oil prices. Market opportunities and risks through the different phases of the program are highlighted.
  
  
• Institutional and Policy Developments - Identification of key trends in the institutional capacity and growth of this new and growing market. PIRA provides assessments of policy developments as they impact the Phase I, Phase II and prospective Phase III markets.
  

• PIRA’s forecasting of worldwide fuel balances provides insight into future emissions relative to projected UN IPCC scenarios as well as national CO2 trends that illustrate expected emissions positions relative to the Kyoto requirements. Given its key role in the Kyoto and post-Kyoto frameworks, one special report will focus on Japan’s GHG policies and developments.
  
  
• Post-Kyoto policy developments. While the Kyoto Protocol expires in 2012, PIRA’s review and insight into ongoing discussions and proposals for GHG regulation after Kyoto can help inform longer-term strategic decision-making. Developments involving broader inclusion of the developing world into the regulatory regime and more direct regulation of additional sectors, such as aviation and transportation, are also reviewed.
  
  
• Special focus reports will address and analyze key GHG mitigation and policy issues developing in the U.S. and Canada. Additional reports include coverage of motor vehicle-related GHG analysis, emissions-reduction technologies, and corporate carbon strategies.

• Worldwide long-term CO2 projections, with by-region and by-country detail.
  
  
• Kyoto participant emissions projections, with estimates of reduction shortfalls.
  
  
• For the European ETS:
  • Updates of country- and sector-level emissions forecasts, overall emissions vs. total allowances
  • Historical emissions balances
  • Expected regional coal-gas price spreads
  • Implied CO2 prices for fuel switching (using various generating capacity)

• U.S. quarterly power sector CO2 data.
  
  
• CO2 “emissions calculators” for coal, gas and oil generation technologies
  
  
• Price histories and forecasts — delivered through PIRA’s integrated Energy Price Portal — for
  • EUAs (Phase I)
  • EUAs (Phase II, III)
  • RGGI CO2
  • WCI CO2
  • U.S. Federal CO2

• Relevant emissions factors: global warming potential factors for the different greenhouse gases, carbon content of different fuels
  
  
• PIRA’s macroeconomic slide shows covering developments in Europe, North America and Asia
  
• Worldwide CDD/CDD weather (monthly)

• Power generation, refineries, iron and steel, cement/lime/ceramics, and pulp/paper
• Other sectors utilizing industrial boilers/CHPs for their production processes
  

Other GHG-intensive sectors covered by Kyoto
Greenhouse Gas Emissions can provide insight into how developing policies to comply with Kyoto will affect their industries — including the transportation sector, where growth is driving the largest emissions increases.

GHG-intensive industries in North America
Greenhouse Gas Emissions sheds light on the “lessons learned” from the pioneering markets, explaining how regional efforts are shaping up and the prospects and directions for potential national efforts.

GHG-intensive industries in the developing countries
Greenhouse Gas Emissions provides estimates of the value of emissions-mitigation efforts in order to assess sellable project-based Kyoto reductions and to develop a longer-term post-Kyoto emissions strategy.

Gas, coal, and electricity traders and marketers
Provides critical intelligence and an outlook on CO2 and its impact on power prices and levels of inter-fuel competition.

Coal, gas, and oil producers
Greenhouse Gas Emissions helps them monitor longer-term demand-side developments resulting from GHG policy changes across the globe.

Banks and other financial institutions
More and more, investors are demanding that companies disclose their potential financial risk from GHG regulation. Efforts such as the Carbon Disclosure Project are working to catalogue and understand the differing and common approaches for identifying and addressing these risks. Greenhouse Gas Emissions can help institutions better quantify such risks. The service also identifies risks and opportunities for investments in “greener” and higher efficiency projects and technologies.

Dr. Ronald B. Gold (Director, North American Emissions) is an international energy economist with broad experience in analyzing energy, economic, and environmental trends. He overseas PIRA’s North American Environmental Markets Service. Dr. Gold joined PIRA in 1997 after retiring from Exxon, where he was Company Economist and Manager of the Energy Outlook Division. In that capacity, he supervised a team of economists and other energy specialists preparing international energy and economic outlooks and conducting special business-related studies. Earlier in his career, he worked for the U.S. Treasury Department and Office of Tax Analysis, and he was also an assistant professor of economics at Ohio State University. Dr. Gold received his undergraduate degree from Brooklyn College, City University of New York, and his M.A. and Ph.D. in economics from Princeton University.

Bruno Brunetti (Sr. Director, European Electricity) joined PIRA Energy in 2001 and manages PIRA's European Electricity Retainer Service. Prior to PIRA, he was at Caminus Corp., where he carried out a wide range of market studies, providing advice to a significant number of new projects as well as working on acquisition and divestment of assets across Europe. Bruno began his career in the strategic planning department of Enel in Rome. Bruno graduated magna cum laude in economics and management from Bari University (Italy) and obtained a masters degree in energy economics from the ENSPM, the School of the French Institute of Petroleum (Paris).

Jennifer McIsaac (Environmental Economist for the Emissions Group) co-authors PIRA’s N.A. EMIS reports. Before joining PIRA, she worked at NUI Corp., where she analyzed gas supply needs and recommended baseload/swing purchases and storage injections/withdrawals. Prior to that, while pursuing her undergraduate and graduate degrees, she was an economics research intern in Exxon Company International's Corporate Planning Department, where among many tasks she analyzed emissions in the transportation and power generation sectors. She holds a BA from Drew University and is a doctoral candidate in economics at Cornell University.

Dan Klein (Director, International Coal) oversees PIRA’s International Coal Retainer Service. He is responsible for the International Thermal Coal Market Forecast and International Coal Markets Scorecard, and he contributes to the U.S. Coal Market Forecast. Prior to directing the International Coal Service, Mr. Klein was a member of PIRA’s North American Electricity team. He has a BA in economics from Calvin College.

Michelle Patron (Director, Political Risk) oversees the Global Political Risk Service. She has over a decade of experience analyzing international energy issues. Prior to joining PIRA in 2004, Ms. Patron was a Fellow at the Council on Foreign Relations and conducted energy research at Deutsche Bank. She spent five years as an international policy advisor at the U.S. DOE under the Clinton and Bush administrations. In 2001, she served as Energy Attaché at the U.S. Embassy in Beijing. Prior to the DOE, she worked at the International Energy Agency, the White House, UNICEF and the Center for International Environmental Law. Ms. Patron holds a BA from Columbia University and an MA from Johns Hopkins School of Advanced International Studies.