EMEA > German emitters expect EUAs to near €16 by 2020, top €25 by 2030 -survey

German emitters expect EUAs to near €16 by 2020, top €25 by 2030 -survey

Published 15:52 on September 25, 2015  /  Last updated at 15:52 on September 25, 2015  / Ben Garside /  EMEA, EU ETS

German companies regulated under the EU ETS expect carbon prices to reach €25.45 by 2030, lower than the €30 mark they say is needed to incentivise emission reductions, according to an annual survey.

German companies regulated under the EU ETS expect carbon prices to reach €25.45 by 2030, lower than the €30 mark they say is needed to incentivise emission reductions, according to an annual survey.

Around 120 firms polled by investment bank KfW and researchers ZEW in their CO2 Barometer survey said they expect, on average, prices to reach €15.92 by 2020 and €25.45 by 2030.

The projections are lower than a recent Carbon Pulse analyst poll, which had an average forecast of €16.85 for 2020.

The companies’ 2030 expectation is also below the forecasts of EU policymakers, who expect prices to rise between 2021-2030 and average €25 over the decade, based on completed Phase 4 reforms.

The KfW/ZEW survey, carried out in March and April, found the companies expected prices to reach €7.82 by this December. The benchmark ICE futures contract for Dec-15 expiry is today at €8.00.

The participating firms represent 23% of ETS-regulated companies and 39% of verified emissions in Germany, which itself is the biggest emitting nation in the EU carbon market.

Key findings:

EUA prices not an abatement driver:

  • When asked about how high the price for emission allowances has to incentivise abatement, respondents on average said €30 was needed.
  • 76% have invested in, or changed production processes to, reduce emissions. Process optimisations and investments in energy efficiency were the main abatement activities, yet only around 10% said abatement was the primary objective.

Less trading engagement:

  • Companies decreased their trading in 2014, the first year in which activity had not increased since the survey began in 2009.
  • 59% of the firms were engaged in the carbon market in 2014. The main reason not to trade was the possession of a sufficient number of allowances to cover requirements.

Pessimistic outlook:

  • 15% of respondents see it as likely that an international climate agreement will be reached at in Paris later this year.
  • More than half of the surveyed companies expect electricity prices to increase by 2016, while the prices of coal, oil and gas aren’t seen as following suit.

By Ben Garside – ben@carbon-pulse.com