CO₂ emission allowances

Inčukalns Underground Gas Storage (UGS) is a participant in the European Union Emissions Trading System (EU ETS), and therefore settlements are made for the CO₂ emissions generated to ensure its operation.

Considering Conexus’ CO₂ allowance (1 CO₂ allowance = 1 ton of CO₂ emissions) reserves, system users have so far not been required to make payments for these emissions; however, in the coming years, the CO₂ emission allowances allocated to Conexus will be exhausted.

Based on current estimates, system users may have to start paying for CO₂ emissions beginning with the 2027/2028 storage cycle.

The cost of allowances will be proportional to the volume of fuel gas used by the system user for compressor unit operations.

In accordance with paragraph 50 of the Inčukalns UGS regulation, system users are required to cover fuel gas consumption and the corresponding CO₂ allowance costs, based on calculations provided by the system operator.

A detailed procedure for settling CO₂ emissions related to natural gas injection and withdrawal by system users at the Inčukalns UGS will be developed during 2026, and system users will be informed.

Indicative calculation (if all CO₂ emission allowances need to be purchased in the relevant year):

  1. For the 2025/2026 storage cycle, the fuel gas consumption coefficient is set at KDG = 1.17%.

  2. The CO₂ emission factor for natural gas is 0.2 tons/MWh.

  3. The price of 1 CO₂ allowance is approximately EUR 90/ton.

  4. Injecting 1 MWh of natural gas may emit approximately 0.00234 tons of CO₂, resulting in a cost of EUR 0.211/MWh.