Welcome!

News Feed Item

Easy Times are Over, Says ICIS, as Carbon Prices Enter Bullish Corridor

KARLSRUHE, Germany, August 21, 2014 /PRNewswire/ --

Tough times ahead for industrials with ETS compliance obligations, as reduced auction volumes and back-loading mean carbon prices set for sustained increase, reaching double digits by 2015 

With prices hitting a 5 month high of €6.50 today, established energy intelligence provider ICIS Tschach predicts a sustained increase in the price of European Trading Scheme (ETS) allowances. On current trajectories, prices are expected to hit double digits and a two-year high by year's end. Such an increase would be a worrying trend for those with significant compliance obligations, especially large, carbon-intensive industrials.

Since the beginning of the EU ETS's Phase 3 compliance period at the start of 2013, the market has been oversupplied with allowances, leading to a sustained period of trading within a €3-6 corridor. Now however, a number of factors are converging to push prices consistently higher.

"After all the volatility and exceptional trading activity in Q1 2014, we are seeing the effects of back-loading really start to take hold now" said Philipp Ruf, Lead Analyst, EU Carbon Markets at ICIS. "Next to the reduced auction volume, the appetite of industrials to sell banked length is rather muted while the demand from utilities seems constant. All these factors, together with the potential momentum derived from the policy discussion around the 2030 emission reduction target and the Market Stability Reserve, suggest a sustained bullish corridor for carbon prices."

Higher carbon prices represent a business risk to all sectors where there is an emissions compliance requirement. However, the biggest effect is likely to be felt in the carbon-heavy industrial sector.

"Up to now, industrials have enjoyed a huge number of free allowances under the scheme and could easily cover their obligations and maybe even sell some allowances at a profit," notes Jan Frommeyer, Director of Market Analysis at ICIS. "Now the free allowances are scarcer, and most carbon-heavy industrials will face a shortage of allowances in the near future. That's not so risky with prices as low as they have been, but as they edge higher it becomes more and more of a problem."

ICIS predicts that carbon prices will enter double digits by the start of 2015 for the first time since 2012. However, with further planned political interventions designed to keep prices high, prices of above €20 are perfectly feasible in the third trading period. Such a scenario would represent a significant risk to large industrials and an intelligent and informed hedging strategy will be vital to protect profits.

"It's not all about the risks though," adds Frommeyer. "For those that proactively manage their exposure now there's a real opportunity to gain a competitive advantage over rivals with less effective hedging strategies."

Notes to editors: 

About EU ETS 

Launched in 2005, the EU's Emissions Trading Scheme is the cornerstone of the EU's policy to combat climate change.

Large carbon emitters are required to surrender an allowance for each tonne of CO2 emitted. A certain number of free allowances is awarded to each participant and more are released at auction. Allowances may then be traded as required.

The EU ETS was from the start designed as a multi-national - with all EU member states participating in the system - as well as a multi-sector system. In 2013 more than 11,000 stationary installations in 31 countries participated in the scheme. Covered by the EU ETS are carbon dioxide (CO2) emissions from power and heat generation, energy-intensive industry production and commercial airlines as well as nitrous oxide (N2O) and per-fluorocarbons (PFCs).

The system covers around 2bn tonnes of carbon emissions (around 45% of the EU's greenhouse gas emissions in 2013) and the average price for a European Union Allowance (EUA) was €4.50 in 2013.

About ICIS 

ICIS Tschach Solutions provides information and intelligence to every participant in the carbon markets. ICIS Tschach Solutions employs a unique combination of quantitative and qualitative research and expert opinion to deliver detailed insight into emissions and carbon trading schemes, and identifies important commonalities and disparities. Our Timing Impact Model provides clients with a more rounded perspective than conventional approaches and helps create competitive advantage. We offer clients a complete and transparent analysis of market dynamics, including emerging upside or downside risks to carbon prices and the assumptions on which these are based.

ICIS has more than 30 years' experience providing pricing information, news, analysis and consultancy to buyers, sellers and analysts of energy and related commodities. In 2013 it acquired Tschach Solutions to add specialist carbon trading services to its portfolio. ICIS Tschach Solutions is based in Karlsruhe.

About Reed Business Information 

At Reed Business Information we provide information and online data services to business professionals worldwide. Customers have access to our high-value industry data, analytics, information and tools. Our strong global brands hold market-leading positions across a wide range of industry sectors including banking, petrochemicals and aviation where we help customers make key strategic decisions every day. RBI is part of Reed Elsevier, a leading global provider of data, information and solutions for professional customers.

About Reed Elsevier 

Reed Elsevier is a world leading provider of information solutions for professionals. We help scientists make new discoveries, lawyers win cases, doctors save lives, corporations build commercial relationships, insurance companies assess risk, and government and financial institutions detect fraud.

Media contact:
Jacqueline Savory
Senior Marketing Manager
Email: [email protected]
Direct: +44-(0)208-652-4490
Mobile: +44-(0)7825-680550


SOURCE ICIS

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Both SaaS vendors and SaaS buyers are going “all-in” to hyperscale IaaS platforms such as AWS, which is disrupting the SaaS value proposition. Why should the enterprise SaaS consumer pay for the SaaS service if their data is resident in adjacent AWS S3 buckets? If both SaaS sellers and buyers are using the same cloud tools, automation and pay-per-transaction model offered by IaaS platforms, then why not host the “shrink-wrapped” software in the customers’ cloud? Further, serverless computing, cl...
You know you need the cloud, but you’re hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You’re looking at private cloud solutions based on hyperconverged infrastructure, but you’re concerned with the limits inherent in those technologies.
The taxi industry never saw Uber coming. Startups are a threat to incumbents like never before, and a major enabler for startups is that they are instantly “cloud ready.” If innovation moves at the pace of IT, then your company is in trouble. Why? Because your data center will not keep up with frenetic pace AWS, Microsoft and Google are rolling out new capabilities. In his session at 20th Cloud Expo, Don Browning, VP of Cloud Architecture at Turner, posited that disruption is inevitable for comp...
No hype cycles or predictions of zillions of things here. IoT is big. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, Associate Partner at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He discussed the evaluation of communication standards and IoT messaging protocols, data analytics considerations, edge-to-cloud tec...
"When we talk about cloud without compromise what we're talking about is that when people think about 'I need the flexibility of the cloud' - it's the ability to create applications and run them in a cloud environment that's far more flexible,” explained Matthew Finnie, CTO of Interoute, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
IoT solutions exploit operational data generated by Internet-connected smart “things” for the purpose of gaining operational insight and producing “better outcomes” (for example, create new business models, eliminate unscheduled maintenance, etc.). The explosive proliferation of IoT solutions will result in an exponential growth in the volume of IoT data, precipitating significant Information Governance issues: who owns the IoT data, what are the rights/duties of IoT solutions adopters towards t...
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
It is ironic, but perhaps not unexpected, that many organizations who want the benefits of using an Agile approach to deliver software use a waterfall approach to adopting Agile practices: they form plans, they set milestones, and they measure progress by how many teams they have engaged. Old habits die hard, but like most waterfall software projects, most waterfall-style Agile adoption efforts fail to produce the results desired. The problem is that to get the results they want, they have to ch...
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, Doug Vanderweide, an instructor at Linux Academy, discussed why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers wit...
The Internet giants are fully embracing AI. All the services they offer to their customers are aimed at drawing a map of the world with the data they get. The AIs from these companies are used to build disruptive approaches that cannot be used by established enterprises, which are threatened by these disruptions. However, most leaders underestimate the effect this will have on their businesses. In his session at 21st Cloud Expo, Rene Buest, Director Market Research & Technology Evangelism at Ara...
When growing capacity and power in the data center, the architectural trade-offs between server scale-up vs. scale-out continue to be debated. Both approaches are valid: scale-out adds multiple, smaller servers running in a distributed computing model, while scale-up adds fewer, more powerful servers that are capable of running larger workloads. It’s worth noting that there are additional, unique advantages that scale-up architectures offer. One big advantage is large memory and compute capacity...
"We are a monitoring company. We work with Salesforce, BBC, and quite a few other big logos. We basically provide monitoring for them, structure for their cloud services and we fit into the DevOps world" explained David Gildeh, Co-founder and CEO of Outlyer, in this SYS-CON.tv interview at DevOps Summit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
SYS-CON Events announced today that IBM has been named “Diamond Sponsor” of SYS-CON's 21st Cloud Expo, which will take place on October 31 through November 2nd 2017 at the Santa Clara Convention Center in Santa Clara, California.
A look across the tech landscape at the disruptive technologies that are increasing in prominence and speculate as to which will be most impactful for communications – namely, AI and Cloud Computing. In his session at 20th Cloud Expo, Curtis Peterson, VP of Operations at RingCentral, highlighted the current challenges of these transformative technologies and shared strategies for preparing your organization for these changes. This “view from the top” outlined the latest trends and developments i...