![CO2 allowance prices and coal-to-gas switching prices in 2014-2016 [source: GSE]](http://gastopower.co.uk/media/k2/items/cache/884bb991a79922716df25fc4342f10d8_S.jpg)
A rebound in CO2 emission allowance prices in Europe in the second part of 2016 was among the factors contributing to the increase in competitiveness and output for gas-fired generation, according to Italy's Gestore Servizi Energetici (GSE).
In its annual report on the CO2 emission allowances market, GSE – the state-owned company that oversees this market in Italy – noted that the stoppage of nuclear plants in France and consequent increase in electricity and coal prices contributed to a rise in CO2 allowance prices in October and November, as demand for allowances under the EU Emission Trading System (ETS) increased.
Despite CO2 allowance prices seeing a sharp downward trend in 2016, with an average annual price of Eur5.26/mt against Eur7/mt in 2015, prices recovered towards the end of the year, mostly on the back of power market dynamics. Therefore, CO2 allowance prices stood above coal-to-gas switching levels, and this partly contributed to the rebound in gas-fired generation across Europe, GSE said.
EU sees 721 mil CO2 allowances allocated in 2016
Looking at 2016 data, GSE noted some 721 million CO2 emission allowances were auctioned in Europe in 2016 under the EU ETS, of which 715 million EU allowances (EUA) and 6 million EU allowances aviation (EUA A).
GSE said EUA and EUA A sales raised Eur3.8 billion and Eur32 billion respectively in 2016.
In Italy, some 77 million EUA were allocated for Eur407 million, accounting for 10.8% of total revenues in Europe, making Italy the third largest EUA market.
Moreover, some 749,000 EUA A were sold in Italy for Eur4 million.