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Carbon emissions allowances reached a fresh eight month high of €6.85 per metric tonne earlier this week as political support for a reform of the beleaguered market continues to mount.
On Wednesday the European Union’s carbon market closed at €6.85/mt, its highest level for eight months, with the following morning’s allowance auction also clearing at an eight month high of €6.78/mt.
The eight month high stands €1.33/mt or 24.3 per cent above pricing levels seen in early October, according to market specialists at Platts, as work began in the EU Parliament’s environment committee on reform proposals made in January.
Under the new plans the committee will move excess allowances from the market to a reserve in a bid to address the long-running oversupply which continues to weigh on pricing levels.
“Sentiment remains strong, the market is pricing that the [EU’s environment committee] will propose effective legislation to combat the surplus of allowances currently in the market,” an analyst note from CF Partners said.
“Manuel Arias Cañete, the EU’s new climate commissioner in an address to the EU Parliament, restated the commitment of the EU council to making the ETS the cornerstone of EU climate change policy, a speech which could further have emboldened bullish sentiment,” the note added.
The chronic oversupply of allowances in the market since the economic recession dramatically cut demand has prompted the need for regulatory intervention. By stepping in the EU hopes to boost the market price to levels which send a price signal to potential low carbon investors.
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