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
SYS-CON Events announced today that Secure Channels will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. The bedrock of Secure Channels Technology is a uniquely modified and enhanced process based on superencipherment. Superencipherment is the process of encrypting an already encrypted message one or more times, either using the same or a different algorithm.
Traditional on-premises data centers have long been the domain of modern data platforms like Apache Hadoop, meaning companies who build their business on public cloud were challenged to run Big Data processing and analytics at scale. But recent advancements in Hadoop performance, security, and most importantly cloud-native integrations, are giving organizations the ability to truly gain value from all their data. In his session at 19th Cloud Expo, David Tishgart, Director of Product Marketing ...
SYS-CON Events announced today that Bsquare has been named “Silver Sponsor” of SYS-CON's @ThingsExpo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. For more than two decades, Bsquare has helped its customers extract business value from a broad array of physical assets by making them intelligent, connecting them, and using the data they generate to optimize business processes.
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management solutions, helping companies worldwide activate their data to drive more value and business insight and to transform moder...
DevOps at Cloud Expo – being held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Am...
Almost two-thirds of companies either have or soon will have IoT as the backbone of their business in 2016. However, IoT is far more complex than most firms expected. How can you not get trapped in the pitfalls? In his session at @ThingsExpo, Tony Shan, a renowned visionary and thought leader, will introduce a holistic method of IoTification, which is the process of IoTifying the existing technology and business models to adopt and leverage IoT. He will drill down to the components in this fra...
The vision of a connected smart home is becoming reality with the application of integrated wireless technologies in devices and appliances. The use of standardized and TCP/IP networked wireless technologies in line-powered and battery operated sensors and controls has led to the adoption of radios in the 2.4GHz band, including Wi-Fi, BT/BLE and 802.15.4 applied ZigBee and Thread. This is driving the need for robust wireless coexistence for multiple radios to ensure throughput performance and th...
SYS-CON Events announced today that Pulzze Systems will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Pulzze Systems, Inc. provides infrastructure products for the Internet of Things to enable any connected device and system to carry out matched operations without programming. For more information, visit http://www.pulzzesystems.com.
Enterprise IT has been in the era of Hybrid Cloud for some time now. But it seems most conversations about Hybrid are focused on integrating AWS, Microsoft Azure, or Google ECM into existing on-premises systems. Where is all the Private Cloud? What do technology providers need to do to make their offerings more compelling? How should enterprise IT executives and buyers define their focus, needs, and roadmap, and communicate that clearly to the providers?
SYS-CON Events announced today the Kubernetes and Google Container Engine Workshop, being held November 3, 2016, in conjunction with @DevOpsSummit at 19th Cloud Expo at the Santa Clara Convention Center in Santa Clara, CA. This workshop led by Sebastian Scheele introduces participants to Kubernetes and Google Container Engine (GKE). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, students learn the key concepts and practices for deploying and maintainin...
SYS-CON Events announced today that SoftLayer, an IBM Company, has been named “Gold Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. SoftLayer, an IBM Company, provides cloud infrastructure as a service from a growing number of data centers and network points of presence around the world. SoftLayer’s customers range from Web startups to global enterprises.
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. Big Data at Cloud Expo - to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is...
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Digital innovation is the next big wave of business transformation based on digital technologies of which IoT and Big Data are key components, For example: Business boundary innovation is a challenge to excavate third-party business value using IoT and BigData, like Nest Business structure innovation may propose re-building business structure from scratch, as Uber does in the taxicab industry The social model innovation is also a big challenge to the new social architecture with the design fr...
Data is an unusual currency; it is not restricted by the same transactional limitations as money or people. In fact, the more that you leverage your data across multiple business use cases, the more valuable it becomes to the organization. And the same can be said about the organization’s analytics. In his session at 19th Cloud Expo, Bill Schmarzo, CTO for the Big Data Practice at EMC, will introduce a methodology for capturing, enriching and sharing data (and analytics) across the organizati...