Carbon edges up as EU confirms emissions fell 11 per cent last year
But incomplete data makes it difficult for traders to draw conclusions over short-term market outlook.
The price of carbon credits in the EU Emissions Trading Scheme (ETS) today edged up around two per cent, reaching €12.65 on the spot market by mid-afternoon after the European Commission released preliminary figures suggesting emissions from companies covered by the scheme fell 11.2 per cent in 2009.
The drop in emissions was largely the result of last year’s economic downturn and was in line with analyst expectations.
“The fall in emissions is exactly as expected,” said Kjersti Ulset from analyst firm Point Carbon. “But prices have increased this morning, probably because uncertainty about emissions levels has been removed.”
The preliminary data revealed that carbon emissions fell right across the EU, with emissions falling 12.5 per cent in Britain, 8.4 per cent in Germany, 16.3 per cent in Spain and 16.4 per cent in Italy.
However, Alessandro Vitelli, director of strategy and intelligence at analyst firm IDEAcarbon, said that gaps in the data made it difficult for carbon traders to get a clear picture about potential demand for EU emission allowance credits (EUAs).
“Bulgaria, Cyprus, Malta and Portugal have not provided any data yet, and it does not include data on CERs [UN-approved certified emission-reduction credits],” he said. “We think the market is about 90 million tonnes long, but that is before you start to take CERs into account. When you consider them, it could be up to 200 million tonnes long.”
He added that the picture was likely to become clearer next month, with the expected publication of preliminary CER data.
Despite there being a clear surplus of EUAs in the market as a result of the recession, there is growing evidence that firms are willing to hold on to their excess credit for use in the next phase of the scheme when emission caps on participating firms will be significantly tighter.
Vitelli predicted that EUA prices could even rise from next year, ahead of the start of the next phase of the scheme in 2013, as companies take up hedging positions and purchase credits in phase two of the scheme for use in phase three.
Any increase in the price of EUAs is likely to increase pressure on energy prices, strengthening the case for energy-efficiency investments while also helping to stimulate spending on low-carbon energy sources.
The price of carbon credits in the EU Emissions Trading Scheme (ETS) today edged up around two per cent, reaching €12.65 on the spot market by mid-afternoon after the European Commission released preliminary figures suggesting emissions from companies covered by the scheme fell 11.2 per cent in 2009.
The drop in emissions was largely the result of last year’s economic downturn and was in line with analyst expectations.
“The fall in emissions is exactly as expected,” said Kjersti Ulset from analyst firm Point Carbon. “But prices have increased this morning, probably because uncertainty about emissions levels has been removed.”
The preliminary data revealed that carbon emissions fell right across the EU, with emissions falling 12.5 per cent in Britain, 8.4 per cent in Germany, 16.3 per cent in Spain and 16.4 per cent in Italy.
However, Alessandro Vitelli, director of strategy and intelligence at analyst firm IDEAcarbon, said that gaps in the data made it difficult for carbon traders to get a clear picture about potential demand for EU emission allowance credits (EUAs).
“Bulgaria, Cyprus, Malta and Portugal have not provided any data yet, and it does not include data on CERs [UN-approved certified emission-reduction credits],” he said. “We think the market is about 90 million tonnes long, but that is before you start to take CERs into account. When you consider them, it could be up to 200 million tonnes long.”
He added that the picture was likely to become clearer next month, with the expected publication of preliminary CER data.
Despite there being a clear surplus of EUAs in the market as a result of the recession, there is growing evidence that firms are willing to hold on to their excess credit for use in the next phase of the scheme when emission caps on participating firms will be significantly tighter.
Vitelli predicted that EUA prices could even rise from next year, ahead of the start of the next phase of the scheme in 2013, as companies take up hedging positions and purchase credits in phase two of the scheme for use in phase three.
Any increase in the price of EUAs is likely to increase pressure on energy prices, strengthening the case for energy-efficiency investments while also helping to stimulate spending on low-carbon energy sources.
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