Tag Archives: emissions
Industry Outlook For Carbon Prices To Remain Low To 2020
Monday 3rd June 2013 The value of carbon allowances traded on the EU’s Emissions Trading System (ETS) won’t recover to pre recession levels before 2020 according to an annual survey of industry players, raising concerns about the long term impact of the UK’s carbon price floor for energy intensive businesses in the UK. The views come in an annual survey by PwC for the International Emissions Trading Association (IETA), examining views of carbon market investors, traders and advisors, who meet today at the industry’s annual conference in Barcelona. The outlook for price recovery remains weak according to members, due to the oversupply of allowances, reduced demand and policy uncertainty. EU allowances (EUAs), which traded at over €30 before the recession, are currently trading at around €3.50, and only 7% of the value of what is believed to be necessary to shift economies onto a low carbon pathway (€47). 56% of respondents expect EUAs to trade at €5-10 between now and 2020, a 47% fall from last year’s expectations for the same time period, and a 68% fall from those in 2011. With such low prices for energy intensive businesses including manufacturers and energy generators, the Carbon Price Support Mechanism was introduced to incentivise investment in low carbon power generation, through a carbon tax. But the collapse in European carbon prices since 2011 means the UK faces higher carbon prices than elsewhere in Europe. The results raise competitiveness concerns for UK businesses with carbon leakage likely if companies relocate production to other EU countries to avoid costs. Jonathan Grant, director, PwC Sustainability & Climate change, said: “With a sustained period of low prices expected for EU carbon permits, the UK’s Carbon Price Floor looks increasingly out of line with the rest of Europe, which raises concerns about the impact on UK business, when other countries in the EU don’t have a similar tax.” In the survey, members also overwhelmingly backed intervention by the European Commission to reform the EU ETS within 12 months. The Council is due to vote on proposals in June, but the survey shows members feel the proposals will not go far enough to boost values. Four out of five now feel that domestic or regional policy initiatives are likely to be more important than international negotiations over the next five years. The linking together of domestic or regional carbon markets was particularly highlighted, with 94% expecting the EU and Australian carbon markets to be linked before 2020, and 25% for both California and South Korea. The new Californian carbon market, launched at the start of the year, is expected to increase its share of the global market in terms of value, with California Carbon Allowances expected to continue trading at US$10-20 over the first three years of the programme. Jonathan Grant, director, PwC, who performed analysis on the survey, said: “Despite the collapse of carbon prices, it’s reassuring that all regulated entities surveyed said that the carbon price is still relevant to their capital investment decisions, with four out of five saying it is an important factor. “However a sustained period of low prices expected for EU carbon permits, means business looks set to face a patchwork of climate tax and regulation over the coming years which may raise concerns about competitiveness and high administrative costs.” Continue reading
World’s Carbon Markets: EDF, IETA Launch Online Resource On Emissions Trading Programs
By NAT KEOHANE | BIO | Published: JUNE 3, 2013 While Washington is stuck in gridlock, other jurisdictions around the world are moving forward on climate policy. Market-based approaches to cutting carbon are in place in jurisdictions accounting for nearly 10% of the world’s population. Above: areas shaded blue have emissions trading programs that are already operating; areas in green have programs that are launching or being considered. Market-based approaches to cutting carbon are already in place in jurisdictions accounting for nearly 10% of the world’s population and more than a third of its GDP. Many more jurisdictions are either moving ahead with market-based measures, or actively considering them. As interest grows around the world, policymakers are increasingly seeking information about the range of existing and proposed initiatives. In response, EDF has partnered with the International Emissions Trading Association (IETA) , a trade association that represents businesses involved in carbon trading and climate finance, to launch The World’s Carbon Markets: A case study guide to emissions trading . The online resource provides detailed information about key design elements and unique features of 18 emissions trading programs that are operating or launching around the world. EDF has also put together a quick reference chart that makes comparing the 18 programs even faster and easier. Growing interest in emissions trading Market-based policies are a proven way to limit carbon pollution and channel capital and innovation into clean energy, helping to avert the catastrophic consequences of climate change. While emissions trading programs around the world, like the ones we have looked at in detail, vary in their features, they all share the key insight that well-designed markets can be a powerful tool in achieving environmental and economic progress. The countries, states, provinces and cities highlighted in this report, which are moving ahead with strong action on climate change, constitute a vital and dynamic world of “bottom-up” actions that complement multilateral efforts such as the ongoing United Nations climate negotiations. Jurisdictions considering market-based approaches can use this new resource to learn from their growing number of peers already headed in that direction. We expect the site will also be of value for policy makers, academics, analysts, journalists, and colleagues in the NGO community and beyond. If you find the information in The World’s Carbon Markets case studies helpful, please share edf.org/worldscarbonmarkets with your networks. Continue reading
Commission Repeats Calls For Carbon Market Reform As Surplus Allowances Double
The number of surplus carbon permits under the European Union’s Emissions Trading System (EU ETS) doubled to two billion last year, the European Commission has announced. 21 May 2013 Topics Climate Action Commissioner Connie Hedegaard said that the figures for 2012 underlined the need for urgent action to address the “supply-demand imbalance” under the struggling scheme. “The good news is that emissions declined again in 2012,” she said. “The bad news is that the supply-demand imbalance has further worsened in large part due to a record use of international credits.” “At the start of phase 3, we see a surplus of almost two billion allowances. These facts underline the need for the European Parliament and Council to act swiftly on back-loading,” she said. The European Parliament rejected a proposal by the European Commission to ‘backload’ a number of allowances under the scheme , as a temporary measure to address falling prices and lack of demand, last month. The proposal will be refined by the Parliament’s Environmental Committee, before returning to Parliament for a new vote next month. The EU ETS was established in 2005 and was the first major emissions trading scheme in the world. Phase 3 began on 1 January 2013, and runs until 2020. Under the scheme there is a cap on greenhouse gas (GHG) emissions from prescribed energy intensive installations. Installations must purchase GHG emissions allowances, called European Union Allowances (EUAs), which represent the right to emit or discharge a specific volume of emissions in line with national allocation plans. Operators of installations must hold EUAs equal to, or more than, total emissions at the end of the EU ETS year and those with excess allowances can ‘bank’ them or trade with those who need to buy more allowances to comply with emissions limits. The European Commission’s proposals would see 900 million allowances that would otherwise have been made available for auction between 2013 and 2015 transferred to later in the third phase of the EU ETS. By doing this, the Commission hopes to address the build-up in allowances caused by reduced industrial activity during the economic downturn. The price of allowances is currently below €4 per tonne according to Thomson Reuters Point Carbon – well below a historical average of €30 per tonne. According to the Commission’s figures, the number of surplus allowances rose from around 950 million at the end of 2011 to almost two billion by the end of 2012. This was due to a “combination” of the use of international credits, auctioned allowances from earlier phases of the scheme and remaining free allowances granted to new entrants to the scheme. Since 2008, the EU ETS has allowed installations to use international emissions reduction credits generated under the Kyoto Protocol to offset part of their emissions. Compliance with the rules of the scheme was “high” in 2012, according to the Commission. Less than 1% of participating installations did not surrender allowances to cover their 2012 emissions by the deadline of 30 April 2013, while aircraft operators responsible for over 98% of 2012’s aviation emissions had also fulfilled their responsibilities under the scheme. This year, aviation emissions fell under the EU ETS for the first time; however aircraft operators were given the option to limit reporting to only those flights within Europe. Environmental law expert Eluned Watson of Pinsent Masons said previously that backloading was merely a “quick fix” for the EU ETS, but that more time would be needed to put together a longer term reform package. ” Urgent action is required, backed by clear legislative support, to structurally reform the EU ETS and to rebalance the supply and demand of allowances in the EU ETS market, ” she said, as prices fell to a record low of €2.81 a tonne at the start of this year. “Although the backloading proposal is very much a ‘quick fix’, reactionary measure, it is clear that longer term structural reform will take time, with changes unlikely to be in place until 2017 at the earliest,” she said. Continue reading
