Assessment on impacts of emission trading on city-level (ET-CL)

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Impacts of emission trading on city-level is an Impact assessment taking a wide perspective over environmental issues that can be dealt with on city level. The focus is on issues affected by the requirements set by an international treaty on greenhouse gas emission reduction and its regional operationalization in the EU. It studies several contemporary ideas, plans, and pieces of legislation in an integrated and systematic way. It tries to find hidden caveats, expose policies based on popular trends rather than science, and assess the impacts of new innovative solutions. It aims to offer information and guidance to the political process for developing a new international treaty in the UN climate change meeting in Copenhagen (COP-15), December 2009. The Analytica model file can be accessed here.


ET-CL model overview.PNG


The purpose is to evaluate the impacts of alternative greenhouse gas (GHG) emission trade systems, which aim to reduce GHG emissions and thereby affect radiative forcing. The assessment is performed on a city-level, and the emission trade system is taken as an external constraint to the societal decision making on city-level. It thus considers city-level climate change mitigation measures in the major sectors causing GHG emissions, namely power production, heating, and traffic. Three major outputs are considered: a) greenhouse gas emissions, b) health impacts within the city, and c) costs of GHG emission trade and the direct costs of mitigation actions. The health impacts of climate change are not within the focus, but rather the impacts of climate change mitigation measures that are put in action in the city within decision making context constrained by the emission trading system. Individual and societal interests and decisions, and their interplay is specifically in focus. Situations where individual and societal values are in conflict are identified and examined. Policies aiming at resolution of these conflicts are sought for. D↷

Especially, the assessment aims to produce useful guidance and insight into the UN climate change meeting in Copenhagen (COP-15) in December 2009.

The basic research question for the assessment can be defined as:What are the impacts of emission trading on city-level?.

The question can be broken down into a set of sub-questions such as

  • How does the composition of an emission trading system influence city-level decisions upon activities causing significant GHG emissions?
  • How do those city-level decisions affect the decision making of individual citizens regarding those activities?
  • how do these city-level and individual decisions together result as changes in the the activities, and consequently their impacts?


  • Spatial: Helsinki Metropolitan Area (Helsinki, Espoo, Vantaa, Kauniainen) D↷
  • Temporal: From beginning of EU ETS phase III (2013) to year 2030. Especially, years 2013 (beginning of EU-ETS phase III), 2020 (end of EU-ETS phase III), and 2030 (forecast point in Claih) considered.
  • Activity sectors: R↻
    • Personal traffic
    • Heating of buildings and water
  • Pollutants:
  • Health impacts: Cardiopulmonary mortality due to exposure to fine particles (PM2.5). DALYs are used for summarizing health effects. D↷
  • Other impacts: Costs D↷
    • Direct internal costs of the activities
    • Costs of emission allowances (emission trading)
    • Personal direct costs for citizens consuming services provided by the activities in consideration
    • Health costs
  • Population: The whole population in the Helsinki Metropolitan Area (capital region) is considered as the active population making societal and individual decisions regarding the activities and whose health impacts attributable to the activities are estimated. However, climate change impact of the emitted CO2 is considered globally.
  • Decision-makers:
    • The international community deciding upon international climate agreement and political leaders of EU deciding upon the EU-ETS
    • The society in Helsinki region, in particular the Helsinki Metropolitan Area Council as the decision-maker for inter-municipality decisions such as public transport, and the city councils of Helsinki, Espoo, Vantaa and Kauniainen
    • Random citizens living in the area (as residents or passengers)
  • Decisions:
    • International decisions about the EU-ETS (as a constraint to city-level decision making)
    • City-level decisions regarding heating and transportation, influenced by the EU-ETS
    • Citizen-level decisions regarding the choice of mode of transportation, the choice of mode of heating in detached houses, and improving energy efficiency (as adaptation to the city-level decisions)

Optional extensions of the core assessment:

Possible extensions may take place in addition to the core project, if the right experts, resources, and interest show up during the assessment.

  • Power consumption could be assessed as one of the activities, especially if decisions affecting power consumption and its production are to be included in the assessment
  • Copenhagen could be another case city
  • The assessment of Helsinki could be extended to the whole metropolitan area (Greater Helsinki), including the neighbouring municipalities within ca. 60 km from Helsinki (The current coverage is ca. 25 km)
  • Physical exercise due to daily activities and the related health impacts could be assessed (possible linkage with TAPAS!)
  • Household waste treatment (typically landfill vs. incineration) could be assessed as a source of energy, fine particles, and greenhouse gases


Base-case: EU-ETS on phase III (2013-2020) as proposed by EU commission, including following amendments to current ETS phase II (2008-2012) (Follow the links for explanations of the latest EC proposal, the initial EC proposal, and check EU-ETS in Wikipedia):

  • Possibility to opt-out small installations from ETS, disregarding their activity, if a) <35 MW capacity, b) <25 kt reported CO2 eqv emissions/year during each 3 year preceding start of phase III, or c) installations are operated by hospitals
  • CO2 emissions from petrochemicals, ammonia & aluminium production included
  • N2O emissions from nitric, adipic & glyoxalic acid production included
  • perfluorocarbon (PFC) emissions from aluminium production included
  • capture, transport and geological storage of all GHGs included
  • aviation included starting from 2012
  • Total EU-wide emission cap instead of national action plans by member states
  • Auctioning of >50 % of emission allowances (instead of distributing all for free)
  • Road & ship transport NOT included
  • Land use, land use change & forestry (carbon sinks) NOT included
  • EU-wide emission cap set as: phase II cap average, adjusted to the broadened scope of phase III as well as the amount of excluded small installations, decreasing annually by 1,74 %. The tentative annual cap figures (before adjustments) are presented in the table below. The final figures for the annual emission caps in phase III will be determined and published by the Commission by 30 September 2010.
  • EU-ETS assumed to continue with the same scope and same rate of annually decreasing emission cap until 2030

Year Mio t CO2
2013 1,974
2014 1,937
2015 1,901
2016 1,865
2017 1,829
2018 1,792
2019 1,756
2020 1,720

Scenarios regarding international climate agreements (modifications to base-case):

  • Opt-out of small installations discarded from EU-ETS phase III
  • Road transport IS included in the EU-ETS phase III (emission allowances allocated to fuel suppliers)
  • EU-wide emission cap set significantly tighter than base-case following a possible tight international treaty agreed upon in COP-15 (how much might the cap be tightened?)

Background scenarios:

  • Future development paths according to IPCC scenarios (which scenarios to be chosen for assessment?)

Intended users



  • The Risk research group from THL.
    • Jouni (composite traffic)
    • Marko (PM, traffic)
    • Mikko
    • Virpi (relations to Claih)
    • Pauliina (relations to Bioher)
    • Pasi (small scale energy production emissions)
    • Erkki (traffic: congestion charging)
  • Intarese WP1.4 (DALY, Monetarization, Risk perception??)
  • Open assessment workshop 2009 participants



CarbonTrade city-level.PNG

Decision variables

International decisions (see also scenarios):

  • Include road traffic in EU-ETS phase III (yes/no)
  • Small installations excluded from EU-ETS phase III (yes/no)
  • EU-ETS emission cap set tighter than commission proposal (yes (how much?)/no)

Primary city-level decisions (optimizing total societal costs including health costs):

  • More support for public transport (Yes/No) - support targeted directly to ticket price
  • Extension of the district heating system (Yes/No) - additional network, additional heat production
  • Founding a composite traffic system (Yes/No) - targeted to areas lacking good public transport, changed distribution of car/composite/public traffic
  • Choice of fuel for district heating - two following options mutually exclusive (topic also considered in Claih
    • Replacing current plants as the district heat source with planned Fortum nuclear power plant in Loviisa or Fennovoima nuclear power plant in Ruotsinpyhtää (yes (proportion replaced 50%?)/no). ----1: . Public vote about nuclear energy has been suggested. (type: truth, paradigm: science view) --Jouni 20:33, 16 February 2009 (EET)
    • Investing in a new bioenergy plant within Helsinki (yes/no) -

Optional additional city-level decisions:

  • Subsidies for improving energy efficiency in buildings (Yes/No) - also to be considered in Claih?
  • Area planning and land use (Dense vs. loose city structure for new buildings)
  • Setting a congestion charge zone to downtown Helsinki (yes/no)
  • Large-scale biofuel use in transportation ----2: . Should be considered. (type: truth, paradigm: science view) --Jouni 02:03, 19 July 2009 (EEST)

Citizen-level decisions (optimizing direct personal cost):

  • Choosing mode of transportation (personal car/composite traffic/public transportation)
  • Choice of heating system in new detached houses (Electricity/Oil/Wood chip) (see Bioher)
  • Energy efficiency upgrade (yes/no) - interaction with city-level energy efficiency subsidies

Indicator variables

  • Health impacts of PM2.5 from traffic and heat production in Helsinki metropolitan area
  • Total societal costs of traffic and heat production in Helsinki metropolitan area

Other variables

Impact assessment (main) model

  • outcomes
    • Health impacts of PM2.5 from traffic and heat production in Helsinki metropolitan area → f(PM2.5 emissions, dispersion, population, population activity patterns, ERF of PM2.5)
    • Total societal costs of traffic and heat production in Helsinki metropolitan area → f(operating cost, decision cost, GHG emission permit cost, GHG emission climate impact cost)

already existing relevant variable pages:

PM2.5 exposure

Health effects from PM2.5




Heat production module

  • outcomes
    • GHG emissions from heat production in Helsinki Metropolitan area → f(fuel consumption, emission factors)
    • PM2.5 emission from heat production in Helsinki Metropolitan area → f(fuel consumption, emission factors)
    • Operating costs of heat production in Helsinki Metropolitan area → f(fuel type, fuel consumption, fuel price, maintenance and operating costs)
    • Cost of district heating expansion in Helsinki Metropolitan area → f(expansion of district heating, coverage of district heating, unit cost of expansion)

already existing relevant variable pages:

Housing stock module

  • outputs
    • Heat need of building stock in Helsinki metropolitan area (to heat production module) → f(building stock, heat need by building types)
    • Costs of energy efficiency renovations in Helsinki Metropolitan area
    • Costs of heating system renovation in Helsinki Metropolitan area

already existing relevant variable pages:

Traffic module

  • outputs
    • PM2.5 from traffic in Helsinki metropolitan area
    • GHG emissions from traffic in Helsinki metropolitan area
    • Costs of traffic in Helsinki metropolitan area
    • Cost of implementing composite traffic in Helsinki metropolitan area


  • Time: Years 2013, 2020, 2030
  • Age groups: years 0-1, 1-30, 31-65, 65+
  • Area: 129 areas within the Helsinki Municipality Area


  • Value of information (VOI) analysis on all decision options
  • Optimization of actions based on cost-benefit analysis and a utilitarian decision-maker
    • BBN
  • Analysis (identification) of conflicting interests of the citizen, the municipality, and the industry
  • It might be a clarifying way to describe all energy flows using the basic unit (in addition to watt) which is equal to the primary energy consumption of an average person. This is something like 100 W (or for a working person, a few hundred watts). Another way to express radiative forcing is to compare it to the primary energy utilised for a particular greenhouse gas emission. Generally, the ratio is in the order of 1 J utilised, 300 J of increased radiative forcing.



Not yet available.


Not yet available.

See also

This assessment is tightly coupled with three other assessments:

EU funded projects from Cordis database