UBS: Prices to fall further
Over at New Values Community (NVC), they report on an analysis of carbon prices by investment bank UBS. Money quotes (with speaker indicated):
[UBS:] “We… believe there is further downside risk in the 2007 CO2-price… We reduce our average 2007 CO2 price estimate from €5.00 per tonne to €3.00 per tonne. We believe that the carbon price could end the year at €1.00 per tonne,” the report said.
[NVC:] The scheme, which accounts for approximately 45-50 per cent of CO2 emissions from the European Union, was oversupplied by around 100 million allowances (5 per cent) during 2005, the first year of its operation. Data for 2006 will be made available on 15 May, although it is widely expected that this will also show a surplus.
[UBS:] “We expect the presentation of the 2006 emissions review on 15 May to be a key catalyst for carbon to continue the fall,” the report said.
[NVC:] Conversely, UBS expects the second phase of the scheme, which runs from 2008-2012 to be undersupplied, or short, by 8-11 per cent with prices to increase to €20.00 for the first three years of the phase and rising to €30.00 for the last two years.