EU carbon prices have lifted more than 30 per cent off their record lows sustained in mid-February, but amid an absence of firm positive signals to explain the rise there can be little confidence that the market has yet put the worst behind it.
The benchmark
EUA Dec 09 forward delivery contract closed at €10.98 on the European Climate Exchange on March 3, almost 34 per cent above the February 12 low point for EUAs in the
EU ETS second phase. Later dated contracts have seen a greater recovery with the Dec 12 contract back above €13 this week.
There has been a lift in energy prices over the past week, and in relative price of gas to coal. While this is a boost for carbon permit demand, brokers say this doesn’t explain the extent of the lift in carbon prices lately. There have been some volatile swings and carbon has been moving quite counter to oil, gas and coal prices at times.
The heavy selling of EUAs by recession-hit industrial firms appears to have eased somewhat, Climate Corporation reports in its latest research note, perhaps lending some support to carbon prices.
Societe Generale has revised downward expected emission levels in the EU for 2008 and 2009, dropping its EUA average price forecast for 2009 from €17 to €11.80. "We do not see EUA prices recovering to 2008 levels by 2012 mainly due to the effect of the recession on emissions," Reuters reports analyst Emmanuel Fages saying.
The next scheduled market-moving event for carbon comes in a month’s time when official EU emissions data for 2008 is released. This will tell just what impact the economic downturn had on emissions in Europe in the second half of last year. The data will give a more solid insight into what shortage, if any, of EUA permits its likely in 2009.
A poll of carbon community subscribers by Reuters Interactive shows 63 per cent believe that Dec 09 EUA prices have yet to see the bottom, only 37 per cent thought the worst was over.
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