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28 | 29th August - 4th september 2014 | utILItY WeeK Markets & Trading This week Rejig carbon market, say manufacturers energy-intensive industries are particularly vulnerable to eu's emissions trading system Manufacturing trade body EEF has said that failure to reform the EU Emissions Trading System will result in declining industrial investment in Europe. EEF warned the European Council that without changes to the EU's climate change policy – specifically the Emissions Trad- ing System (EU ETS) – investors would be alienated. Energy-intensive industries are particularly at risk, it said. Gareth Stace, head of climate and environment policy at the EEF, said: "Reducing our carbon emissions through to 2030 is going to be an enormous challenge with the targets currently on the table representing a tripling of effort from 2020 onwards. We cannot hit those targets without support for energy-intensive industries." Stace continued: "If we leave the EU ETS essentially as it is today… we will only serve to push these vital indus- tries through the exit door to other parts of the world." Eurofer, the European Steel Association, has esti- mated that without reforms to improve carbon-leakage protection, the European Steel sector could face costs of €40-60 billion between 2021 and 2030. Furthermore, said EEF, energy-intensive industries are reaching the limit of their ability to improve effi- ciency and cut carbon emissions without new technol- ogy, such as carbon capture and storage. The European Council will meet in October to agree a climate change framework for the EU to 2030. It will consider a new emissions reduction target and renewed commitments to efficiency and renewable energy. JG energY Price index 'will bring transparency' Energy price reporting agency Icis has launched a wholesale power market price index that it says will bring greater transpar- ency to the market. The Icis Power Index (IPI) tracks prices across the two most traded seasonal contracts, which are used to trade electricity for the coming year. At the moment these contracts are Winter 2014/15 and Summer 2015 but these roll over twice a year as the new season begins. The IPI will be freely avail- able and produced every work- ing day, taking into account the daily closing price of wholesale power for delivery over the coming year which is then weighted according to volume and demand. Icis' head of power markets, Zoe Double, said the index could help remove confusion about which price is used to indicate the value of the market. gAs Gas price 43% lower than last year Gas bought for prompt delivery on the UK's wholesale market in July cost 43 per cent less than the average price paid in July last year, despite rising demand from combined cycle gas tur- bines for power generation. Price reporting agency Platts said the average price of near-term gas was 43 per cent lower year-on-year in July, hav- ing fallen 5 per cent from the average price in June, the result of low demand for gas storage injection aer a mild winter. Alex Froley, Platts energy analyst, said: "The decline in demand would have been even greater… if not for an increase in natural gas use by power generators, who took advantage of lower gas prices and switched away from coal." gAs UK gas storage 'full by early September' Energy analysts predict that the UK will reach its maximum capacity for domestic gas stor- age in the first week of Septem- ber, earlier than the previous year's gas injection schedule. Gas Storage Europe said the UK's gas stocks stand at just below 94 per cent, whereas at the same time last year the UK was at 79 per cent of capacity. Reuters Point Carbon gas analyst Oliver Sanderson said the UK's seasonal storage facility at Rough could be full "in about 16 days". "We could see a small volume of injections into early September," he said, "but I would expect it to be full by the time it is scheduled to go down for three weeks annual mainte- nance on 6 September." EU steel sector faces costs of €40-60bn to 2030 Tricks of the trade Jillian Ambrose "Jump to transparency – it won't always be optional" The latest in market transpar- ency was rolled out last week with the launch of a year-ahead focused electricity price index from benchmark transparency providers at Icis. For those keep- ing count: the UK's electricity market is now subject to the daily scrutiny of market report- ers, a daily bespoke transpar- ency "index", monthly market "snapshots" from Energy UK, and with a possible sector-led initiative currently under discus- sion behind closed doors. some shadowy back alley where murky deals are done to the det- riment of the consumer, despite what some journalists would have us believe. For anyone interested enough – politicians, regulators, consumers – market informa- tion has always been available. But there's a huge difference between understanding some- thing and accepting it. It turns out transparency drives which seek to build trust, need a little trust to start with. Oh, and the Competition and Markets Authority. Let's not for- get that the power markets are currently subject to the glare of the highest competition regula- tor in the land and will remain so for the next 18 months. So how much more transpar- ency is needed? When the news-reading population of the UK possesses wholesale energy market insight on a par with the average junior trading desk analyst, will this bring about a collective "a-ha" moment? Will all doubt over energy company dealings then evaporate? Of course not. The UK's gas and power markets are not