An investment fund asked Emerton to provide robust ranges for the expected development of the GHG quota price in Germany, considering a range ofscenarios, such as the regulatory evolution in light of the upcoming RED IIIlegislation until 2030 and beyond.
Provision of robust range estimates for the German GHG quota price which supported theclient in the process of making an investment decision
Step 1: Evolution of regulatory framework at EU and national level
- Assessment of climate and GHG emission targets at EU and at national level in Germany
- Deep dive into Germany’s GHG reduction scheme in the transportation sector
- Identification of GHG reduction targets per year, minimum sub-quotas, floor limits, multipliers, and GHG values for each crediting option until 2030
Step 2: Development of GHG quota price and main influencing factors
- Several expert interviews to gather market insights covering the entire biofuel/e-mobility value chains
- Detailed analysis on historic GHG quota price development and influencing factors (e.g., brown grease from China)
- Translation of insights into a modeling approach
Step 3: Merit order modeling and sensitivity analysis of the results
- Merit order modeling of eligible GHG quota crediting options based on production cost per unit of GHG savings
- Sensitivity analysis incorporating 35+ scenarios based on the evolution of regulation, production costs, and other factors
- Synthesis of findings for the 2030 time horizon and beyond
