SITE Seminar | Not all carbon price risk is equal: Strike price sensitivity across steel, ammonia and methanol
Join us for the next SITE Seminar! On October 6, 2026, we welcome Mara Balasa to discuss how carbon contracts for difference can support industrial decarbonisation across steel, ammonia and methanol, and why differences in sectoral cost structures matter for the design of technology-neutral auctions.
Working paper title
Not all carbon price risk is equal: Strike price sensitivity across steel, ammonia and methanol
By: Mara Balasa
Abstract
Hard-to-abate industries face volatility in key inputs and uncertain decarbonisation pathways. Carbon contracts for difference (CCfDs), policy instruments that pay producers the difference between an agreed strike price and the market carbon price, are increasingly used to hedge carbon price risk, including in the European Union's upcoming Industrial Decarbonisation Bank. This will allocate CCfDs across sectors in a technology-neutral way, making all pathways compete in the same auction.
However, existing research has focused mainly on steelmaking. We calculate CCfD strike prices across six decarbonisation pathways in three industries: steel, ammonia, and methanol, and assess their sensitivity to electricity prices. We find that green ammonia has the highest strike price of all pathways studied, reaching €358/tCO₂ compared to €26/tCO₂ for blue ammonia at an electricity price of €60/MWh, leaving it uncompetitive in a shared, technology-neutral auction.
These results provide the cost-structure evidence needed to design CCfD auctions that avoid inadvertently excluding higher-cost but strategically important pathways.
Registration
In-person attendance at this seminar does not require registration. If you wish to participate online via Zoom, please register your details in advance to receive the Zoom link.
- On-site at SSE: No registration required.
- Online via Zoom: Registration is required to receive the meeting link. Click here to register for online attendance.
Speaker
Mara Balasa is a PhD Fellow at the Center for Statecraft and Strategic Communication, a Visiting PhD Fellow at the University of Cambridge Judge Business School, an associate member of Peterhouse College MCR, and Senior Associate with Energy Policy Group.
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