The price of European carbon allowances (known as European unit allowances, or EUAs) has risen only modestly this year, to about €27 ($43, £21) a tonne. But market pressures are building that could take the price to €100 a tonne or higher. . .How did that prediction do?
The markets have an uncanny ability to find the weak hand. Those emitters with too few allowances to cover their carbon output are going to get squeezed by the lack of supply, and a rise to at least €100 looks inevitable.
The graph at the top of this post shows carbon allowances are this week at record lows, at about 7 euros. The vertical line on the left side of the graph shows the carbon allowance price when the Deutsche Bank prediction was made.
Today, a number of large companies in Europe, presumably in possession of a large number of allowances, petitioned the EU to "prop up" the market:
Royal Dutch Shell, Philips and more than a dozen other top international companies have made an urgent plea to Brussels to prop up the flailing European Union carbon market after another week of plunging prices. . .In a move to file under "unintended consequences" the group of companies has also asked the EU to think twice about efforts to improve energy efficiency:
Brussels should also rethink the “distorting” impact some of its other policies are having on the carbon market, the companies said, especially an energy efficiency measure the European parliament is due to vote on next week.I wonder if anyone predicted that outcome?
Forcing large industrial plants covered by the EU emissions trading system to become more energy efficient would further dampen demand for ETS allowances . . .
8 comments:
Maybe if you take the error bars into account, the observed behavior will "be consistent" with the prediction.
OTH, are you sure it wasn't a projection?
-1-John M
Ha!
Actually, I think that an application of a non-linear trend will fix things right up ;-)
Big enviro, big oil, big gov and access to the tax payer's wallet.
A perfect storm.
End. It. Now.
The advise for Europe is NOT to work on energy efficiency because it would distort the carbon trading market?
I think that is quite funny ...
But it ha not been homogenised hasn't it? I m sure that the great mids at CRU can hide the decline,even turn it into a hockey stick....LOL
"the group of companies has also asked the EU to think twice about efforts to improve energy efficiency"
Or in other words, we're all for free markets when we can turn a profit, but want governments to intervene when we can't.
'I wonder if anyone predicted that outcome?'
Anyone who has been paying attention to coal extraction productivity numbers should have been able to predict the outcome.
Coal extraction productivity has been dropping for a decade which means the price has to rise.
It's interesting that the EU carbon market and the EU currency are both are falling flat at the same time. Both were flushed out by the financial crisis. It's ironic that the structures were created to constrain things to a narrative of consistency that the Brussels Bureaucrats had absolutely no control of. Unfortunately, these structures turned out to be more like the steel truss bridge over I-35 in Minneapolis. If just one small piece was designed wrong the whole thing collapsed when something a little out of the ordinary in takes place.
So now the currency and carbon control structures that were designed to create certainty and improve the lot of the European population is now demanding that those same citizens sacrifice a great deal in a futile attempt to save those structures from collapse. I wonder how much extra collateral damage will occur in the economies vainly trying to maintain these structures?
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