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News and market analysis provider Point Carbon has lowered its price forecast for European Union Emissions Allowances (EUAs) for 2013 by €2 to €28 per ton of carbon dioxide. It has also lowered its 2016 price forecast by €3 to €37/tn. The original forecasts of €30 and €40 were made in May.
According to Point Carbon, challenges to international negotiations and a low likelihood of a legally binding agreement at the upcoming Copenhagen summit has contributed to the revision in market policies. The impact of the recession on emissions prices has also been cited as a contributing factor.
“The large difference between EU and US positions in the negotiations reduce the likelihood of a satisfactory agreement – from the EU’s point of view,” says Kjersti Ulset, head of European carbon analysis at Point Carbon. “This makes it harder for the EU to agree to a 30% reduction target, leaving a target in the 20–30% range increasingly likely.”
Analysts at Point Carbon forecast a 30% reduction target as the most likely outcome for the EU and have assigned this outcome a 50% chance of occurring. If the EU were to pledge itself to a 30% reduction, prices would be in the €30/tn to €60/tn region, but if the EU only agrees to a 20% further reduction of emissions, prices of EUAs would fall to between €20/tn and €40/tn.
Author: Katie Holliday
Source: Energy Risk
