comments my way folks..................................................... A plan for auctions by the Brussels-based European
Commission, regulator of the program, removes supply needed by
utilities around 2014, "as the market begins to tighten and its
ability to provide forward hedges begins to be eroded,"
Sikorski said in the report. "Such a formulation seems both
counter-intuitive and flawed," he said. "The formulation seems to be set out to soften price
volatility in the next two years before maximizing price
volatility across phase 3," Sikorski said. "This is a curious
development from the commission, which just strengthens our
opinion that the market would be well served by having an
independent body to manage the future release of primary
liquidity into the market."
+------------------------------------------------------------------------------+
Barclays Boosts Phase III EU Carbon Forecast on Auction Supply
2010-08-05 13:52:03.613 GMT
By Mathew Carr
Aug. 5 (Bloomberg) -- Barclays Capital boosted its price
forecast for European Union emission permits for the eight years
through 2020 by 14 percent because a plan to hold auctions may
boost volatility around 2014.
EU carbon dioxide permits may average 40 euros ($53) a
metric ton in the period, the third phase of the program,
London-based analyst Trevor Sikorski said today in an e-mailed
research note. That's compared with a forecast of 35 euros a ton
made on June 23.
A plan for auctions by the Brussels-based European
Commission, regulator of the program, removes supply needed by
utilities around 2014, "as the market begins to tighten and its
ability to provide forward hedges begins to be eroded,"
Sikorski said in the report. "Such a formulation seems both
counter-intuitive and flawed," he said.
Most allowances in the EU program, the world's largest
carbon market by traded volume, will be sold by auction to
utilities after 2012. They are largely granted for free in the
five years starting 2008, the second phase of the program.
"The formulation seems to be set out to soften price
volatility in the next two years before maximizing price
volatility across phase 3," Sikorski said. "This is a curious
development from the commission, which just strengthens our
opinion that the market would be well served by having an
independent body to manage the future release of primary
liquidity into the market."
Sikorski cut his forecast for the second half of this year
by 6.3 percent to 15 euros a ton, the bank said.
For Related News and Information:
Emission market news NI ENVMARKET <GO>
Today's top energy stories ETOP <GO>
European power-markets home page EPWR <GO>
--Editors: Raj Rajendran, Steve Voss.
To contact the reporter on this story:
Mathew Carr in London at +44-20-7073-3531 or
m.carr@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net
