The International Carbon Pricing (InCaP) tool will assist companies with mid- and long-range emissions strategies.

InCaP allows firms to develop international carbon market scenarios and determine how changes in key variables are likely to affect the price of CO2 allowances and credits.

The tool is based on economic fundamentals, ICF market research and uses energy sector models developed by the consultancy.

ICF said InCaP will give firms the fundamental information needed to analyse and create risk management strategies in today’s carbon constrained environment.

Emissions trading is ramping up with commencement earlier this year of the European Union’s Emission Trading Scheme. Ratification of the Kyoto Protocol has also lifted the importance of international emissions trading.

According to ICF the prospects for buying and selling greenhouse gas emission reductions in an international market offer new risks and opportunities for businesses.

“Although countries vary in their level of preparations for the global carbon market, the implications for everyone in the business community are substantial," ICF Canada managing director Skip Willis said.

ICF senior economist Melinda Harris said understanding the factors that would move the market for carbon permits and the nature of the risks companies faced in complying with carbon constraints would be essential for management planning.