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Wood Mackenzie has published the results of its survey of oil, gas and power com ...

Wood Mackenzie has published the results of its survey of oil, gas and power companies, Carbon Controls and Business 2000. The survey is designed to establish the extent to which energy companies believe that emerging carbon controls will affect their business performance, and the responses which companies are making to them. This publication coincides with the start of the COP 6 climate negotiations in The Hague. Agreement at the meeting is crucial if industrialised countries are to make realistic steps in limiting greenhouse gas emissions. Progress however, could be slow, as many countries believe that cutting emissions will damage their economies, comments the analyst. The survey has found that the majority of companies do not expect a high cost compliance with Kyoto targets. Most expected abatement costs to be less than $10 per tonne of CO2. If so, the overall cost of Kyoto compliance to industrialised countries will be around $1bn-$5bn/y in 2010 - only about $1-$5 per capita/y. Therefore, Wood Mackenzie concludes, COP 6 negotiations in the Hague should not fail for fear of costly implementation in Kyoto. For energy companies, a key indicator of the extent to which their business performance will be affected by future carbon controls is their view of the market price of CO2 permits in an international emissions trade market. If the costs of reducing emissions are high, this will be reflected in a high permit price. Recent forecasts of future permit prices vary dramatically. The average forecast is $27/t CO2, with a maximum of around $70. The Wood Mackenzie survey showed that 65% of participants believed that the market price of CO2 permits would be less than $10/t. Only 5% believed that it might exceed $20/t. Other survey findings show that ? Emissions trading is the most popular tool for dealing with carbon emissions; ? There has been little material response to emerging carbon controls because the issue is seen as making only a short-term impact on business; ? The issue is expected to affect the five-year business strategy of most companies; and finally, ? European participants have been significantly more proactive than US companies in responding to the issue.

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