Hopes Rise Along With EU Carbon Prices, But Hard Road Ahead

摘要

Prospects are at long last starting to look up for the EU's troubled emissions trading system (ETS). Brussels' plans to put the cap-and-trade system at the heart of energy and climate policy, outlined recently in policy proposals for 2020-30, have sparked hopes this could be the beginning of a sustained recovery in carbon prices, although numerous obstacles could yet get in the way. The first stage of the European Commission's effort to shore up carbon prices is expected to start next month, when some excess carbon credits are "backloaded," or temporarily removed from the ETS. The market has already started to respond, with prompt prices now around ?7 ($9.60) per ton, up from lows of under ?3 ($4.10) a year ago, while the forward price curve shows a healthy contango (see graph). Some analysts suggest prices could improve to the mid-teens over the next few years, as credits are held back from the market, but for now, any sharp recovery appears unlikely.