The prices of EU carbon allowances (
EUAs) have seen an upward trend over the past month, climbing 15 per cent since a low point in early March. Prices are now at their highest levels since the early days of January, although trading has not been without volatility.
The release last week of verified emissions data for 2007 across the EU has given the market impetus in recent days, but prices were already being pushed up by rising oil and gas prices and secondary-market CERs losing favour.
The price of the most-traded carbon contract, for forward delivery of EUAs in December 2008, closed at €23.82 on the European Climate Exchange on Monday April 7. This is up €3.15 from a low point on March 4 and continues a recovery after a downturn to below €19 early in the year driven by global financial market instability. EUA contracts further forward have risen around €2, Dec 09s closing at €24.48, Dec 10s at €25.15 and Dec 12s at €26.85.
EUA prices rose almost €1 on the day of release of the 2007 data, which showed emissions had increased about 1 per cent on the previous year. This led analysts to conclude that demand for emissions permits would be rising through the 2008-12 second phase period of the EU Emissions Trading Scheme (
EU ETS), given the tighter emissions allocations plans that apply from this year. Forecasts for price levels in coming years of €30 to €35 have certainly contributed to bullish trade of late.
The spread between EUAs and CERs on the secondary market in Europe has widened considerably to almost €8 from around €6 ten days ago. A brisk trade in issued CERs which began in mid 2007 has now waned. CERs can be substituted for EUAs under the rules of the EU ETS but the release of proposals by the European Commission that may restrict the use of the cheaper Kyoto credits beyond 2012 has seen interest sapped. The market’s emphasis has shifted back to EUAs as a result.
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Europe’s CO2 emissions rise in 2007CER prices mark time in March