Carbon permits continue to fall in value

About 20 percent fewer delegates participated in a conference this week, organised by Point Carbon on the subject of carbon trading.

Director of Point Carbon, Kristian Tangen, said the reduction in delegates was caused by restrictions on travelling expenses this year.

One trader said only half of his company’s regular delegates attended for that reason.

Over the last six months the price of carbon permits has fallen, similar to currency, commodity and share markets, dragging down a new market, which virtually doubled prices each year since it opened in 2004.

About 60 percent of carbon traders, who answered a survey made by environmental and carbon consultants Point Carbon, agreed that carbon credit investments have been stopped or slowed by substantially less manufacturing activity due to the recession.

Pessimism about the market will be short-lived, the conference highlighted.

The carbon market is still young and good signs in the US pointing towards a national cap-and-trade scheme ought to increase its long term value.

Per-Otto Wold, CEO of Point Carbon, said that in the long term there is plenty of scope to make profits.

He said that the anticipated US cap and trade scheme has the constant commitment of President Obama.

The European Union Allowance (EUA) price may fall lower than €25 in 2010.

Demand is lower and a surplus of credits is available from the market.

The number of those polled who replied that they have a surplus of EUAs has increased to 24 percent this year, 9 percent more than last year.

However, many of those surveyed expect a sound recovery over time and that an EUA price of €35 or higher will be achieved by 2020.

The EU’s Emissions Trading Scheme (ETS) was valued at $50 billion last year.

It was established to limit emissions from industry and make available an allocation of permits for trading from emission free energy projects, cleared by the UN, in emerging economies.

In spite of good prospects in the future only 59 percent of the traders who answered the survey, believe that the December UN conference in Copenhagen will result in an international climate consensus.

This depressing cue to the effect of the worldwide economic downturn is in Point Carbon’s Carbon 2009 report of March 17.

Author, Kjetil Røine believes that although the carbon markets have suffered from the international recession, they will recover over time.

The Point Carbon survey shows that traders are sure that the US under President Obama will forcefully participate in the Copenhagen negotiations.