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ICF sees EUA prices breaching €70 by 2020
08 April, 2009 (http://www.carbon-financeonline.com)
The failure of the EU to meet its 2020 renewable energy targets could see EU allowance (EUA) prices hitting €70 ($93) by that date, according to consultancy ICF International. And wholesale power prices in the bloc are set to double over 2010-20, ICF predicted in its latest European Power & Carbon Markets Outlook report.
The consultancy modelled likely EU emissions, abatement cost curves, policy developments and the supply of carbon credits from outside the EU to come up with a variety of scenarios.
The high EUA price scenario is based upon the EU accepting a target of reducing emissions 30% below 1990 levels by 2020 – which it has pledged to do if a successor international agreement to the Kyoto Protocol is struck. ICF believes: “While a satisfactory agreement ... may not be reached in December 2009 as originally planned, it will be in the following months.”
Neil Cornelius, head of energy market analysis for Europe at the US-headquartered firm, told Carbon Finance that if the EU misses its 2020 renewable energy targets – of sourcing 20% of its energy from renewables – the carbon price could be expected to rise dramatically, as more expensive reductions would be needed to compensate for the lower percentage of carbon-free electricity. He declined to provide detailed numbers.
Another key factor will be the extent to which emitters and speculators ‘bank’ carbon allowances from the current phase of the EU Emissions Trading Scheme (ETS), which runs to the end of 2012, into the 2013–20 phase, where carbon caps will be tighter and EUAs presumably more expensive.
“There is likely to be a more significant degree of banking than we appear to be seeing at the moment,” Cornelius said. Lingering uncertainty about the future regulatory shape of the EU ETS and a tough economic environment are discouraging the holding of allowances for future use – indeed, some emitters are believed to be selling allowances to raise cash. “As these factors change, the pricing relationship [between allowances now and for use in Phase III] will change.”
“EU ETS participants should look beyond the current economic and credit crisis and adopt a long-term carbon market strategy that anticipates a sharp rise in demand for emission reductions over the next five years,” added Diane Simiu, carbon analyst. “Anyone going for the ‘dash-for-cash’ approach is in for a rude awakening when the carbon market picks up.”
Analysts credit EU ETS with helping cut emissions
18 February, 2009 (http://www.carbon-financeonline.com)
The EU Emissions Trading Scheme (ETS) succeeded in reducing emissions in the bloc last year, according to a report by New Carbon Finance (NCF).
Sectors covered by the EU ETS emitted 2.1 billion tonnes of carbon dioxide (CO2) equivalent in 2008, the analysts estimate, down 3% on 2007.
The price of carbon was responsible for 40% of this reduction, while the recession – which has caused falling output in many EU ETS sectors – was responsible for 30%. NCF said an increase in renewable power generation and greater availability of nuclear power plants in the UK and Spain were responsible for the rest of the emissions decline.
The recession sparked by the credit crunch was a major driver behind a 5% cut in emissions from industrial sectors. Cement manufacturers have been worst hit by the recession, with output down 9%, or 17 million tonnes, during the year, closely followed by steel production, which fell 6% over the year because of a slowdown in car sales and construction. Steel production dropped 30% in the last quarter of 2008 alone.
The power sector saw emissions decline 2% in the year, to 1.5 billion tonnes, even though electricity generation rose 0.3% year-on-year. The analysts attributed this to fuel switching from coal to gas, a reduction in emissions from coal- and lignite-fired power plants, as well as an increase in wind and hydropower generation.
Industrial emitters have been selling off allowances in a bid to raise cash, contributing to falling carbon prices in the bloc. When imports of credits from Clean Development Mechanism projects are considered, there is a surplus of credits in the EU ETS in 2008, according to the analysts.
That the surplus has not driven down the price of allowances down to zero suggests “that banking of allowances is taking place and the design of the scheme is working as originally intended by the EU”.
“This indicates that some CO2 reductions in 2008 were driven by a desire to bank credits into the post-2012 market, when the scheme is expected to be much tighter,” NCF said.
Voluntary carbon market doubles in 2008
May 22nd, 2009 (http://globalcarbonnews.com)
The voluntary carbon market doubled in size in 2008 despite a decline in transaction activity toward year-end due to recession, the leading report on the sector has found.
The State of the Voluntary Carbon Markets 2009 study, by Ecosystem Marketplace and New Carbon Finance, found 123 million tonnes (mt) of voluntary carbon emission reductions last year, up from 65 mt in 2007. By value, the trade in voluntary carbon offset credits reached $705 million, more than double the $331 million the year beforeAnalysts credit EU ETS with helping cut emissions
18 February, 2009 (http://www.carbon-financeonline.com)
The EU Emissions Trading Scheme (ETS) succeeded in reducing emissions in the bloc last year, according to a report by New Carbon Finance (NCF).
Sectors covered by the EU ETS emitted 2.1 billion tonnes of carbon dioxide (CO2) equivalent in 2008, the analysts estimate, down 3% on 2007.
The price of carbon was responsible for 40% of this reduction, while the recession – which has caused falling output in many EU ETS sectors – was responsible for 30%. NCF said an increase in renewable power generation and greater availability of nuclear power plants in the UK and Spain were responsible for the rest of the emissions decline.
The recession sparked by the credit crunch was a major driver behind a 5% cut in emissions from industrial sectors. Cement manufacturers have been worst hit by the recession, with output down 9%, or 17 million tonnes, during the year, closely followed by steel production, which fell 6% over the year because of a slowdown in car sales and construction. Steel production dropped 30% in the last quarter of 2008 alone.
The power sector saw emissions decline 2% in the year, to 1.5 billion tonnes, even though electricity generation rose 0.3% year-on-year. The analysts attributed this to fuel switching from coal to gas, a reduction in emissions from coal- and lignite-fired power plants, as well as an increase in wind and hydropower generation.
Industrial emitters have been selling off allowances in a bid to raise cash, contributing to falling carbon prices in the bloc. When imports of credits from Clean Development Mechanism projects are considered, there is a surplus of credits in the EU ETS in 2008, according to the analysts.
That the surplus has not driven down the price of allowances down to zero suggests “that banking of allowances is taking place and the design of the scheme is working as originally intended by the EU”.
“This indicates that some CO2 reductions in 2008 were driven by a desire to bank credits into the post-2012 market, when the scheme is expected to be much tighter,” NCF said.
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