EU Carbon Prices Fall to Lowest Since the Recession

LONDON, June 28, 2011 -

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
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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

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