EU carbon prices take a breather after 20% increase in Q1


Some industries, facing added costs in the next phase of emissions trading in Europe, bemoan political measures designed to increase the cost of carbon credits. However, the two main causes of higher EUA prices so far this year have been the earthquake and ensuing nuclear crisis in Japan and unrest in the Middle East and North Africa.

SBB 1 April European Union Allowance (EUA) prices were steadyat the end of March after seeing the fastest increase since 2008. A combination of high oil and gas prices, together with uncertainty over the future of Europe’s nuclear capacity, has caused a 20% jump in prices so far this year.

The December 2011 EUA contract, which has the highest trading volumes, settled on 30 March at €17.05/t ($24.24/t) on the London-based European Climate Exchange (ECX).

The market has been waiting for the release of 2010 emissions figures today before deciding on a direction, Carine Hemery of carbon market analysts, Orbeo, tells Steel Business Briefing. If the total is higher than the 1.95bn t of CO2e Orbeo has forecast then this could push prices higher, she suggests.

The future of Europe’s nuclear power plants will also have an effect on prices, Hemery adds. If German chancellor, Angela Merkel, decides to permanently close the country’s seven oldest nuclear reactors, EUA prices are likely to see another jump, she explains.

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