European carbon prices jump on nuclear crisis

SBB 18 March European Union Allowance (EUA) prices have jumped €1.37/t in a week following uncertainties over Europe’s nuclear power capacities. Germany’s decision to shut down some nuclear plants and suspend extending their lifetimes has fuelled the increase, analysts tell Steel Business Briefing.

December 2011 EUA futures settled at €17.25/t on 16 March on the London-based European Climate Exchange (ECX). Higher EUA prices could mean higher costs for the steel industry from 2013 onwards, when it will have to purchase an increasing quantity of carbon credits.

Germany’s seven oldest nuclear power plants, that generate around 25% of its nuclear capacity, have been closed for at least three months for safety checks as a result of the nuclear crisis in Japan. This will lead to an increased use of fossil fuel power plants and a double effect of higher power prices and higher carbon dioxide emissions, explains Mauricio Bermudez Neubauer, director of carbon markets, trading and risk management at Accenture.

Once safety checks are completed, the nuclear power plants are likely to restart and power prices may then consolidate. However, the extra emissions released during the shut-down could have a more permanent effect on EUA prices, Neubauer adds. Also, if Germany decides against extending the lifetime of its nuclear plants, this would significantly increase EUA demand in the medium to long term.


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