European carbon prices will rise by more than 50% this year
European carbon prices will rise by more than 50 per cent this year and boost the value of global emissions markets for the first time since 2011, according to an analysis published by Bloomberg New Energy Finance (BNEF).
This will be possible thanks of the efforts to curb supply in the EU Emissions Trading Scheme. So, the ‘backloading’ measure, which aims to remove 900 million permits from the EU market between now and 2016, will drive European carbon permit prices up to an average 7.50 euros in 2014. The current value is around 4.75 euros.
EU lawmakers want to freeze the permits until the end of the decade to help raise carbon prices back to levels that encourage investment in cleaner power and energy efficiency.
The rise in prices in the EU, home to the world’s largest cap-and-trade scheme, will help increase the value of all carbon markets worldwide to 46 billion euros ($63 billion) this year, from 40 billion euros in 2013, analysts said. Prices of carbon allowances have plummeted over the past few years due to the glut, the economic crisis and a lack of political will to commit to reducing greenhouse gas emissions.
Also, BNEF said growth in California’s nascent emissions trading programme, as well as the emergence of new schemes in China and South Korea, will also foster the growth of markets globally.
“Carbon markets have been on a roller coaster over the last few” said Guy Turner, chief economist and head of commodities at BNEF. However, Turner predicted ‘backloading’ will help global carbon markets start to recover this year, potentially driving them to a new high of 180 billion euros by 2016.