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We present two stochastic models optimizing a hydro-thermal power system; the first from the perspective of a global system and the second from a sub-system's (country or utility) perspective within a liberalized market. Particularly CO2 emission quotas and CO2 certificate prices are taken into account. The first model seeks to compute the electricity system marginal price as well as the CO2 emissions marginal price by minimizing the expected system's cost of operation. In the second model, the expected revenues of the sub-system within a liberalized electricity market while considering stochastic inflows, electricity, fuel and CO2 prices are maximized. The above-mentioned stochastic variables are represented via joint scenarios. The resulting stochastic linear program will be solved via hybrid SDP/SDDP. Index Terms-CO2 portfolio management, CO2 market price, CO2 quota, CO2 emission trading, energy, power systems optimization, SDDP, Stochastic Linear Programming I. NOMENCLATUREThe nomenclature of this article is summarized in Table I. All data are given in capital letters while the variables are denoted in small letters. The ξ captures the stochastic or random aspects of the data. II. INTRODUCTIONT HE EU power system faces important problems of CO2 emissions excess with respect to the Kyoto treaty. As it is widely known, CO2 is one of the most important inhibitors on the global warming phenomenon, for which the EU has been campaigning actively the last years. We can observe actions that are taken in all countries attempting to optimize the operation of the plants subject to the maximization of profits or the minimization of costs while considering the CO2 emissions. In addition, in order to improve the balancing of CO2 emissions, most of the countries are participating in a 'cap and trade' mechanism where utilities and other industries can optimize their CO2 allocation.In 2005, the EU power system generation consisted of 54% thermal, 31% nuclear and 15% of renewable energy sources (EU 27). The thermal percentage, which accounts for the CO2 Steffen Rebennack is with the

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