Carbon Credit Pricing

The price of EU Allowances (EUAs) are at historic lows. Reduced industrial production among heavy polluters as a result of the credit crunch as well as low oil prices makes us predict a medium-term price floor for EUAs of around €15 a tonne.  Industrial companies are selling off any surplus EUAs in order to raise short-term cash.  European utilities remain buyers caused by a shortfall of allowances.

The price will remain weak whilst emitters  buy up UN-backed credits from outside the EU such as Certified Emission Reductions (CERs). The long term outlook remains positive. There is still going to be a shortfall of EUAs of about 100 million tonnes a year .  Market participants are looking to the EU's 2020 emissions targets.