CARBON FORWARD: With EU ETS reforms near sealed, risks abound for emitters

Published 16:17 on August 24, 2017  /  Last updated at 20:29 on August 24, 2017  /  Bavardage, Conversations, EMEA, EU ETS  /  No Comments

The post-2020 EU ETS reform process is almost complete but while prices are expected to double within four years, the outlook is still uncertain amid a raft of other carbon-cutting measures that could expand should Britain exit the market.

The post-2020 EU ETS reform process is almost complete but while prices are expected to double within four years, the outlook is still uncertain amid a raft of other carbon-cutting measures that could expand should Britain exit the market.

Carbon Pulse is gathering EU ETS traders, regulators and other experts in London on Sep. 26-28 for the second annual Carbon Forward conference, an event aimed at helping scheme participants navigate the quickly evolving European and global carbon market landscape.

“EU ETS Phase 4 reforms are almost through and they mean carbon prices are set to increase considerably in the coming years,” said Haege Fjellheim, head of carbon market analysis at Thomson Reuters, who will be speaking at the conference.

On the basis of those reforms, a Carbon Pulse poll of nine analysts in July forecasted that EUA prices will climb from current levels near €6 into double digits early next decade and above €20 by 2025.

“However, there is still considerable uncertainty about how the market will be affected by Brexit – for both UK and continental installations – and about the impact of complementary policies, both of which could have a major effect,” Fjellheim added.

**Click here for the Carbon Forward 2017 agenda or to book your tickets.**

Reflecting these looming risks, the Carbon Forward 2017 team are putting together a comprehensive programme examining the implications of Brexit and assessing the impact of the ever-growing swathe of other measures that could impact the market.

“Three months into Brexit negotiations, it still seems like both sides are still at such a high level and not getting to the next level on issues such as whether the UK will stay in the EU ETS,” said UK consultant Richard Folland of Climate and Energy Associates.

“It’s difficult to offer much hope of clarity for emitters. While the negotiators are juggling priorities, the companies affected need to plan ahead and it could have major implications,” added Folland, who will convene a panel of experts to discuss Brexit and the EU ETS at Carbon Forward.

The UK’s emissions account for just under 10% of the EU ETS but it stands to exit the market on Mar. 29, 2019 without a specific arrangement in place that analysts have warned is necessary to prevent violent EUA price swings.

Even if Brexit is resolved smoothly, the market could still be blunted by anticipated mitigation impact of other EU and national policies.

“Policies that overlap with the EU ETS are a significant contributor to its current ineffectiveness,” said Kari Kankaanpaa, senior manager of climate affairs at Finnish power company Fortum, adding that over a third of the market’s current 1.7 billion-tonne surplus is a result of other measures such as the EU Renewables Directive.

“Fortum believes it is crucial to embed a mechanism in the EU Governance Regulation to mitigate the unintended effects of other European and national policies on the demand of allowances and resulting surplus in the carbon market,” he said.

Kankaanpaa will outline the extent of these unintended effects at Carbon Forward and detail potential strategies to counter them.

CARBON FORWARD FACTFILE

  • Speakers are already confirmed from the European Commission, an unprecedented line-up of at least eight carbon market analysts, leading participants from utilities, industrials, banks and trading houses, and the governments of Brazil and Norway – the latter the world’s biggest sovereign buyer of carbon credits.  Click here to see the full list.
  • The two-day conference (Sep. 27-28) is being held at the 5-star Canary Riverside Plaza Hotel, while the venue for the pre-conference Training Day (Sep. 26) is just down the street at the Citigroup Centre, 25 Canada Square.
  • It is shaping up to be the event for companies affected by the growing carbon markets. If you have not already done so, reserve your place now
  • Last year’s inaugural Carbon Forward 2016 conference attracted more than 180 delegates & speakers from 27 countries, and this year’s event will be even bigger. Participants, decision-makers, and top-flight speakers are drawn from industry, utilities, brokers / trading houses, government, and trade organisations.
  • Sponsorship opportunities remain for Europe’s top carbon market intelligence and networking event: We have limited sponsorship packages remaining. If your company would like to maximise exposure at the premier carbon conference for managing risks and opportunities in the EU ETS and carbon markets worldwide, get in touch with Mariann Csikesz at info@carbon-forward.com
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