EU Carbon Prices Fall to Lowest Since the Recession

LONDON, June 28, 2011 /PRNewswire/ --

Prices in the EU's emissions trading system have plunged to the lowest levels since a recession-led sell off in March 2009, as European infighting over climate change goals drains the market of demand.

On Friday, prices closed at €12.30 per emissions allowance and have fallen to single digits in early trade on Monday, ICIS Heren data shows.

The reason is that the EU is planning to impose new energy efficiency legislation on the same sectors that are included in the emissions trading system. This will lower emissions from these sectors and mean that they will not have to buy as many allowances as previously thought.

Poland has now blocked moves to restrict the supply of emissions allowances and toughen up the EU's existing carbon reduction target.

The news come at the same time as international pressure is mounting on the EU to let some airlines escape the emissions trading system instead of being included next year as planned. This would remove even more expected demand for allowances.  

"Overlapping climate policies have robbed the emissions trading system of its ability to provide an investment signal for clean technology. The cost of polluting is too low for companies to spend money on cutting their emissions," Isabel Save, editor at energy information provider ICIS Heren, said. "If new EU climate goals kill off demand, the supply of EU allowances will have to fall as well for prices to be sustained.

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Note to editors :

The EU hands out free carbon allowances to all plants included in the ETS at the start of the year. How many allowances each plant receives is based on historical emissions.

The EU data released on Thursday is incomplete and will be subject to changes. A final version will not be released until May.

ICIS Herenis an information service provider for gas, liquefied natural gas, power, carbon and coal market intelligence.  We publish a suite of tailored reports providing news, analysis, benchmark price assessments and indices.  Through our reports we aim to bring liquidity and transparency to power and gas hubs, helping you analyse the sector and make informed business decisions.

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Contact details, for more information and interviews:

Isabel Save
Editor European Daily Carbon Markets

ICIS HEREN
Tel: +44(0)20-7911-1942
E-mail: isabel.save@icisheren.com