EUA price unlikely to move due to MSR for 3 years -analysts

Published 16:05 on March 2, 2015  /  Last updated at 14:50 on May 11, 2016  /  EMEA, EU ETS  /  No Comments

EU carbon prices are unlikely to increase in anticipation of the MSR starting because regulated companies and financial speculators are not expected to change their current practices, analysts said.

EU carbon prices are unlikely to increase in anticipation of the MSR starting because regulated companies and financial speculators are not expected to change their current practices, analysts said.

In a report published over the weekend, London-based Energy Aspects said the MSR is not likely to alter EUA prices dramatically until it is introduced, after which it would soon push prices up by as much as 50%.

The analysts said three things needed to happen for EUAs to rise before the start of the MSR (tentatively scheduled for 2019):

  • Electricity companies increase their buying of EUAs to cover forward power sales
  • Industrial companies refrain from selling more of their EUA surplus than their current rates
  • Speculators buy and hold volumes until 2019

“None of these seem likely to us currently, so we have not changed our forecasts for EUAs for the next three years,” the analysts added.

Energy Aspects forecast EUA prices to average €8 in 2015, €10.5 in 2016, €12 in 2017 and 2018.

The analysts said the MSR would have a major impact once it starts, and they upped their longer-term price forecast to reflect changes proposed by the EU Parliament’s environment committee to start it by 2019 rather than 2021 and to fill it with backloaded and unallocated volumes.

They also made the following average price predictions:

  • 2019: €16 (up from €12 previously)
  • 2020: €18 (up €9 from previously)
  • Phase 4 (2021-2030)- €44 (up from €34 previously)

By Ben Garside – ben@carbon-pulse.com