EU carbon price plumbs new depths on weak emissions data
Carbon prices in the EU Emissions Trading Scheme (ETS) hit a new record low of €6.14 a tonne yesterday afternoon, following the release of new EU data showing the greenhouse gas emissions covered by the scheme were lower than expected last year.
Prices fell by around 14 per cent during the afternoon, beating the previous record low of €6.30 a tonne as traders contemplated the impact of ongoing oversupply in the market.
The preliminary data from the EU showed that emissions from sites covered by the EU ETS fell 2.6 per cent during 2011 to around 1.89 billion tonnes.
Analyst firm Thomson Reuters Point Carbon said that the slow economic recovery and mild weather meant emissions fell short of expectations, adding that the data suggested that emissions had failed to reach the scheme’s cap for a third year in a row, creating further oversupply in the market for EU emissions allowances (EUAs).
The preliminary data comes from just under 10,000 sites, which together account for around 90 per cent of emissions covered by the scheme.
Yan Qin, senior modelling analyst for Thomson Reuters Point Carbon, said the biggest reduction in emissions came from the power and heat sector, as “a mild winter and increased renewable generation, especially from wind and solar power, outweighed the impact on emissions from the shutdown of nuclear power plants in Germany”.
The data is likely to further fuel ongoing volatility in the carbon market, according to Point Carbon’s senior market analyst, Marcus Ferdinand.
“The outcome of the 2011 emissions data is below market expectations and will have an additional bearish impact on the current low carbon prices,” he said, adding that the data could also increase the chances of the EU moving forward with recent proposals to boost the carbon price by withholding the issuance of future carbon allowances.
“We started the 2011 with expectations for steady growth and recovery for most sectors after the financial crisis and, indeed, the first half of the year looked promising, with positive economic indicators and industrial production levels growing. However, concerns over Greek and southern European debt escalated during the latter half of the year and worries over slowing growth in the eurozone and the possibility of another recession materialised in slowing production levels for important industry sectors, reflected in the drop in emissions.”
Prices fell by around 14 per cent during the afternoon, beating the previous record low of €6.30 a tonne as traders contemplated the impact of ongoing oversupply in the market.
The preliminary data from the EU showed that emissions from sites covered by the EU ETS fell 2.6 per cent during 2011 to around 1.89 billion tonnes.
Analyst firm Thomson Reuters Point Carbon said that the slow economic recovery and mild weather meant emissions fell short of expectations, adding that the data suggested that emissions had failed to reach the scheme’s cap for a third year in a row, creating further oversupply in the market for EU emissions allowances (EUAs).
The preliminary data comes from just under 10,000 sites, which together account for around 90 per cent of emissions covered by the scheme.
Yan Qin, senior modelling analyst for Thomson Reuters Point Carbon, said the biggest reduction in emissions came from the power and heat sector, as “a mild winter and increased renewable generation, especially from wind and solar power, outweighed the impact on emissions from the shutdown of nuclear power plants in Germany”.
The data is likely to further fuel ongoing volatility in the carbon market, according to Point Carbon’s senior market analyst, Marcus Ferdinand.
“The outcome of the 2011 emissions data is below market expectations and will have an additional bearish impact on the current low carbon prices,” he said, adding that the data could also increase the chances of the EU moving forward with recent proposals to boost the carbon price by withholding the issuance of future carbon allowances.
“We started the 2011 with expectations for steady growth and recovery for most sectors after the financial crisis and, indeed, the first half of the year looked promising, with positive economic indicators and industrial production levels growing. However, concerns over Greek and southern European debt escalated during the latter half of the year and worries over slowing growth in the eurozone and the possibility of another recession materialised in slowing production levels for important industry sectors, reflected in the drop in emissions.”
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