Authors
Erwan Créhalet
CO2 prices have fallen by 60% since their July 2008 peak, hitting an all-time low of €8/t. A deteriorating economic outlook has raised fears of another over-supplied phase in the EU carbon market. CA Cheuvreux sees a shortage of EU CO2 rights estimating that sharp production cuts will achieve only two-thirds of required CO2 emission reductions by 2012. However to cover the remaining deficit by 2012, EU groups will have enough cheap offset Kyoto credits, which should become a price benchmark in the short-term for EU CO2 rights. In contrast emission caps by 2020 are now set, unchanged and challenging.