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EU CO2 May Cost 25 Euro on UN Offset Supply, Deutsche Bank Says
2010-08-31 09:30:42.558 GMT
By Catherine Airlie
Aug. 31 (Bloomberg) -- Deutsche Bank AG may raise its 2010
forecast for European Union carbon-dioxide permits by 25 percent
to 25 euros ($32) a metric ton, over the next few months on
rules limiting and supplying United Nations emissions offsets.
Deutsche Bank is waiting for clarity on whether the United
Nation's Executive Board will curb credits given to HFC-23
reduction projects and what restrictions the EU will put on
using UN emissions offsets.
"Although our base-case year-end price target for prompt
EUAs is 20 euros a ton, this could change in response to near-
term regulatory news flow," Deutsche Bank's Paris-based
analysts Mark Lewis and Isabelle Curien said in an e-mailed
report today.
"If the news flow on these points is more negative than we
are currently assuming, then the risk is that our worst-case
scenario for the 20% target might actually become our base case
within the next few months, implying EUA prices of 25 euros or
more by year-end 2010 or early 2011."
Europe has committed to cutting its emissions to 20 percent
below 1990 levels by 2020. The European Commission, regulator of
the bloc's cap-and-trade program set up to achieve the target,
may raise its ambition to a 30 percent cut should other
countries like the U.S. and China make similar commitments.
A 30 percent reduction would require European factories and
power stations to slash carbon-dioxide emissions on average by
112 million tons a year through to 2020. This could be achieved
by building 50 gigawatts of natural gas-fired power stations to
displace the use of coal. Coal emits almost twice the emissions
as gas-fed plants.
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--Editors: Raj Rajendran, Stephen Cunningham
To contact the reporter on this story:
Catherine Airlie at +44-20-7073-3308 or
cairlie@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss on +44-20-7073-3520 or sev@bloomberg.net
