The potential impact on low-carbon investments of failing to deliver a meaningful deal at the forthcoming Copenhagen Summit was underlined last week with the news that analyst firm Point Carbon is downgrading its long-term price forecasts, primarily as a result of growing uncertainty at the prospects of an international climate change deal being reached.
The analysts' EU ETS Scenarios to 2020 report said that the combination of lower-than-expected emissions over the past 18 months as a result of recession, and the reduced likelihood of binding emissions targets being agreed as part of any Copenhagen Treaty, meant the price of EU emission allowances (EUAs) would be lower than anticipated between 2013 and 2020.
It predicted that the average price for EUAs during the third phase of the emissions trading scheme (ETS) would reach €37 per metric tonne of CO2, down €3 a tonne on the previous forecast issued in May this year. It also downgraded its price forecast for 2013 from €30 to €28 per tonne.
The analyst firm said the downgrades were the result of both the recession, which has left many industrial emitters holding excess EUAs (which they are now expected to roll over into the next phase of the scheme), and the reduced likelihood of the EU triggering its conditional offer to cut emissions 30 per cent by 2020, as part of any Copenhagen agreement.
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