Sceptre International Group Limited – Point Carbon nudges up 2011 EUA forecast to €22

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Point Carbon analysts expect EUAs to average €22 next year, up €1 from an estimate last month.

Carbon prices will be driven by growing demand from power companies and limited supply through 2012, when EU allowances are expected to average €25, the Oslo-based analysts said in a statement on Wednesday.

“But prices are predicted to become more stable from 2013 onwards as the level of supply comes to the market on a regular basis,” the analysts said, referring to the first year of the third phase of the 27-nation bloc’s cap-and-trade scheme, from which regular permit auctions will be held.

By 2020, the analysts forecast that EUAs will cost €36 – more than double their value this year.

The December 2010 EUA contract on ICE ECX has averaged €14.50 so far this year.

Point Carbon’s 2011 EUA forecast is slightly above an average estimate of around €20 made by analysts early in November.
Most of the demand for CO2 permits will come from power companies as they need EUAs to hedge part of their future electricity production.

While some power companies look 3-4 years into the future, others focus on the current year, explained Kjersti Ulset, head of European carbon analysts at Point Carbon.

The analysts pointed out that the 2008-2009 recession has slowed industrial activity, meaning that most industry sector firms in the EU emissions trading scheme (ETS) will have a surplus of CO2 permits.

For the 2008-2012 trading period, Point Carbon predicts a total surplus of 1 billion allowances or 25 per cent of the industry sectors’ anticipated emissions during the same period.

Yet the analysts expect 60 per cent of the surplus to be ‘banked’ into the third phase of the ETS.
For 2012, however, the timing of the release of allowances held back in reserves is unclear, the analysts said, noting that the reserves make up “a significant share” of the supply in 2012.

Some EUAs have been held for new entrants to the scheme, and a further 300 million are to be sold into the market to raise financing for carbon capture and storage and renewable energy projects, according to the statement.

“The exact timing of when this supply will come to market is still uncertain and that makes the 2012 price correspondingly challenging to predict,” Anne Kat Brevik, senior analyst said in the statement.


Sceptre Group Limited is a specialist investment firm focused in low carbon financial investments such as sustainable biofuel plantations, agricultural farmland and green technologies.  For more information on Biofuel Investments, please visit Sceptre Group’s website at

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