Press Releases
The global carbon market has tightened markedly
say IDEAcarbon and ECON in the December Update of their Global Carbon Report
The supply of credits in the two main carbon markets, the EU
Emissions Trading System (EU ETS) and the Clean Development Mechanism (CDM) has
tightened significantly over the last three months, according to the December
Update of the Global Carbon Report, launched today.
In light of growing concerns about asset quality and delivery bottlenecks, IDEAcarbon and ECON have reduced their estimate of available Kyoto credits up to 2012 to 1.85 billion tCO2 – a downward correction of almost 10% compared with September. However, despite this downgrade both public and private demand can be comfortably met, and the market for issued (that is, risk free) Kyoto credits should clear at an average price of €22 (18 – 26) per tCO2 over 2008 – 2012.
The EU ETS market has also tightened. The December Update predicts that the strict emissions cap set by the European Commission – combined with increased economic growth and higher-than-expected gas prices – will result in an annual shortfall of 206 million tCO2, a third higher than anticipated in September. However, because the import limit for Kyoto credits is relatively generous, at 278 million tCO2 per year, the EU market should settle in the same €18-26 range as the Kyoto market – a considerably lower price than many analysts expect.
The market has become much more robust and surprises like the price collapse in the first ETS phase are now unlikely. Simulations carried out in the Report show that it would take an unusual combination of low economic growth, high coal prices and low gas prices to trigger a drastic fall in the allowance price – or reverse circumstances that are similarly unlikely to cause a sharp price rise. The ability to import CDM credits into the system also has a dampening effect on price volatility. The main risk – both upside and downside – to carbon prices are policy developments post-2012. The ability to bank credits beyond the current compliance period creates a continuous trading platform, and post-2012 events, such as a significant tightening or loosening of market rules, will have a significant impact on near-term prices, warns the Global Carbon Report.
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About the Global Carbon Report
The Global Carbon Report is a joint product of ECON and IDEAcarbon. It provides an in-depth and model-based analysis of the global carbon markets and the underlying fundamentals that drive it. It looks at recent developments in the Kyoto market, the EU ETS, other regional schemes and the voluntary market. The IDEAcarbon/ECON Global Carbon Report was launched in September 2007 and is updated on a quarterly basis.
Sir Nicholas Stern, Vice Chairman IDEAglobal Group, comments:
“IDEAcarbon is bringing to the market high quality analysis and independent judgement and assessment. This is especially important in a new market such as that for carbon”
Ian Johnson, Chairman, IDEAcarbon says:
“Rigorous research and empirical analysis is crucial for the further development of the carbon markets globally. The IDEAcarbon/ECON Global Carbon Report makes an important contribution and will be an invaluable resource to both carbon market participants and policy makers alike”
About IDEAcarbon and ECON
IDEAcarbon is an independent and professional provider of ratings, analysis and advice in the carbon sphere. IDEAcarbon provides leading financial institutions, corporations, governments, traders and developers with objective intelligence and analysis of the factors that affect the pricing and valuations of carbon market assets. IDEAcarbon is a wholly owned subsidiary of the IDEAglobal Group, which is an independent, global, research organization. With Sir Nicholas Stern as the Vice-Chairman, the IDEAglobal group has presence in Singapore, London and New York.
ECON is a Nordic consulting company offering insight and understanding into the complex interaction between markets and policies. For more than 20 years, ECON has provided research, analysis, advisory and management consulting services of the highest professional standards. As of September 2007 ECON is part of the Pöyry group.
For further information please contact:
IDEAcarbon
Sam Fankhauser, Managing Director (Strategic Advice)
sfankhauser@ideacarbon.com +44 207 664 0205
ECON (for Scandinavia)
Berit Tennbakk, Director / Partner
Berit.Tennbakk@econ.no +45 60 20 94 10
In light of growing concerns about asset quality and delivery bottlenecks, IDEAcarbon and ECON have reduced their estimate of available Kyoto credits up to 2012 to 1.85 billion tCO2 – a downward correction of almost 10% compared with September. However, despite this downgrade both public and private demand can be comfortably met, and the market for issued (that is, risk free) Kyoto credits should clear at an average price of €22 (18 – 26) per tCO2 over 2008 – 2012.
The EU ETS market has also tightened. The December Update predicts that the strict emissions cap set by the European Commission – combined with increased economic growth and higher-than-expected gas prices – will result in an annual shortfall of 206 million tCO2, a third higher than anticipated in September. However, because the import limit for Kyoto credits is relatively generous, at 278 million tCO2 per year, the EU market should settle in the same €18-26 range as the Kyoto market – a considerably lower price than many analysts expect.
The market has become much more robust and surprises like the price collapse in the first ETS phase are now unlikely. Simulations carried out in the Report show that it would take an unusual combination of low economic growth, high coal prices and low gas prices to trigger a drastic fall in the allowance price – or reverse circumstances that are similarly unlikely to cause a sharp price rise. The ability to import CDM credits into the system also has a dampening effect on price volatility. The main risk – both upside and downside – to carbon prices are policy developments post-2012. The ability to bank credits beyond the current compliance period creates a continuous trading platform, and post-2012 events, such as a significant tightening or loosening of market rules, will have a significant impact on near-term prices, warns the Global Carbon Report.
Upcoming Ethical Corporation conferences & events:
Ethical Employee Engagement & Responsible
Business,
3-4 December, London The Climate Change Summit 2008
12-13th February, London The Global CR Reporting Summit 2008
3-4 March 2008, Berlin The Global Anti-Corruption, Compliance and Ethics Conference USA
16-17 April 2008, Chicago The Responsible Business Summit 2008
13-14 May 2008, London
Notes for editors3-4 December, London The Climate Change Summit 2008
12-13th February, London The Global CR Reporting Summit 2008
3-4 March 2008, Berlin The Global Anti-Corruption, Compliance and Ethics Conference USA
16-17 April 2008, Chicago The Responsible Business Summit 2008
13-14 May 2008, London
About the Global Carbon Report
The Global Carbon Report is a joint product of ECON and IDEAcarbon. It provides an in-depth and model-based analysis of the global carbon markets and the underlying fundamentals that drive it. It looks at recent developments in the Kyoto market, the EU ETS, other regional schemes and the voluntary market. The IDEAcarbon/ECON Global Carbon Report was launched in September 2007 and is updated on a quarterly basis.
Sir Nicholas Stern, Vice Chairman IDEAglobal Group, comments:
“IDEAcarbon is bringing to the market high quality analysis and independent judgement and assessment. This is especially important in a new market such as that for carbon”
Ian Johnson, Chairman, IDEAcarbon says:
“Rigorous research and empirical analysis is crucial for the further development of the carbon markets globally. The IDEAcarbon/ECON Global Carbon Report makes an important contribution and will be an invaluable resource to both carbon market participants and policy makers alike”
About IDEAcarbon and ECON
IDEAcarbon is an independent and professional provider of ratings, analysis and advice in the carbon sphere. IDEAcarbon provides leading financial institutions, corporations, governments, traders and developers with objective intelligence and analysis of the factors that affect the pricing and valuations of carbon market assets. IDEAcarbon is a wholly owned subsidiary of the IDEAglobal Group, which is an independent, global, research organization. With Sir Nicholas Stern as the Vice-Chairman, the IDEAglobal group has presence in Singapore, London and New York.
ECON is a Nordic consulting company offering insight and understanding into the complex interaction between markets and policies. For more than 20 years, ECON has provided research, analysis, advisory and management consulting services of the highest professional standards. As of September 2007 ECON is part of the Pöyry group.
For further information please contact:
IDEAcarbon
Sam Fankhauser, Managing Director (Strategic Advice)
sfankhauser@ideacarbon.com +44 207 664 0205
ECON (for Scandinavia)
Berit Tennbakk, Director / Partner
Berit.Tennbakk@econ.no +45 60 20 94 10
Respond:
Write to the Editor at http://www.climatechangecorp.com/zara.maung@ethicalcorp.com.
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