--- Original Sender: GUY TURNER, BLOOMBERG/ LONDON ---
research attached Some UN Carbon Credits May Face 50% Discount, New Energy Says
By Mathew Carr
Oct. 25 (Bloomberg) -- The United Nations emissions market
will break into two distinct classes as early as this year,
setting up some credits for discounts of as much as 50 percent
by 2016, according to analysis by Bloomberg New Energy Finance.
UN Certified Emission Reduction credits valid under the
next phase of the European Union carbon market may rise to about
24 euros ($33.40) a metric ton by 2016 from 12.92 euros today,
according to a forecast by Aimie Parpia, an analyst in London at
Bloomberg New Energy Finance, which provides research and data
on the carbon markets. Credits banned by the bloc may be valued
at about half that much at 12 euros a ton, she predicted.
The European Commission, regulator of the EU market, is
expecting to publish a so-called "impact assessment" regarding
offset restrictions by November. The commission is seeking to
limit the use of credits from projects deemed improperly
regulated or yielding excessive profits for developers. It may
later propose a ban on credits from hydrofluorocarbon-cutting
projects and others that reduce gas at industrial plants.
Any EU ban on UN credits will clearly "have an impact on
Some UN Carbon Credits May Face 50% Discount, New Energy Says
investor confidence in the Clean Development Mechanism," the
UN-overseen program that creates them, Parpia wrote. "No
business likes to see the rules change halfway through an
investment cycle, and the effect of the ban would have material
financial consequences."
The ban would boost total compliance costs of the EU carbon
market by 18 percent, New Energy Finance estimated. UN credits
accepted under the program would closely track EU allowances
through about 2015, because the ban would effectively curb
supply of CERs, Parpia said.
Last week, CERs were trading at a discount of 2.10 euros a
metric ton to EU allowances.
Quality Restrictions
Quality restrictions may apply as early as Jan. 1, 2013,
according to EU guidance published Dec. 17, 2008. It's not clear
if those restrictions may apply to offsets surrendered from that
date for compliance in the second phase, the five years through
2012, said analysts including Trevor Sikorski at the investment
bank of Barclays Plc in London. Emitters have four months after Dec. 31, 2012, to hand in
allowances or offsets to match their emissions for that year,
the final compliance year in the phase.
Should the EU delay the date when restrictions apply, "you
would expect to see the UN market split later," she 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: Mike Anderson , Stephen Cunningham.
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
