Demand for 2013 C02 71% Below Forecast, Deutsche Bank Says


Demand for 2013 C02 Below Forecast, Deutsche Bank Says (Update1)
2010-12-22 12:42:25.362 GMT

(Updates with prices in fourth paragraph.)

By Mathew Carr
Dec. 22 (Bloomberg) -- Demand from power utilities for
carbon allowances covering 2013 electricity sales was about 71
percent below forecasts this year, according to an analyst for
Deutsche Bank AG.
Demand was about 80 million metric tons of carbon dioxide
allowances, compared with expectations early this year of 278
million tons, Mark Lewis, a carbon analyst at Deutsche Bank,
said today by phone from Paris.
"There's a game of poker going on between the electricity
consumers and the generators," Lewis said. Utilities may be
waiting for higher profit margins on power sales, while
factories may be waiting for even lower prices, he said.
Utilities must buy all carbon allowances needed for 2013,
after having received most permits for free through 2012. EU
carbon for 2011 rose 9.1 percent this year as the bloc moved out
of economic recession, boosting demand. German power for 2011
fell 1.8 percent in the same period.
Emission prices fell earlier this week to 14 euros ($18.40)
a metric ton, their lowest for almost five months, as supplies
of new Certified Emission Reduction credits surged. EU carbon
for December next year rose 1.1 percent today to 14.34 euros a
ton on the ICE Futures Europe exchange.
Prices may be volatile in 2011 as utilities eventually sell
power forward, boosting demand for carbon allowances, Lewis said.
The CO2 price may rise to 21 euros next year, he said.
The EU is unlikely next year to tighten a target to reduce
carbon-dioxide emissions 20 percent from 1990 levels by 2020,
Deutsche Bank said in an e-mailed research note dated yesterday.
The carbon market will trade in line with German power
prices, according to the report.

For Related News and Information:
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--Editors: Raj Rajendran, Rob Verdonck

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