European and UN-backed carbon credits collapse to record lows

The European Union’s carbon permits and UN- issued carbon credits have collapsed to record lows, following a week of economic uncertainty.

With demand from market traders in a European market flooded with emission units reaching alarming levels, it is the strongest sign yet that confidence in the world's largest cap-trade scheme is wearing thin, say analysts.

“Confidence is at an absolute minimum. It's the macro-economic picture and the whole sentiment is not too good,” a carbon trader told Reuters.

EU Allowances (EUAs), front-year carbon permits, reached its lowest level to date of €7.80 a tonne yesterday morning and this could fall even further, according to Matteo Mazzoni, carbon analyst at Nomisma Energia in Italy. “There's room to go down to €7, although I expect prices should rebound in the coming hours,” said Mazzoni.

30 European countries are included in the emission trading scheme, which covers nearly 11,000 power generators and industrial plants on the continent, around half of the bloc’s carbon emissions.

UN-backed credits also fell to record lows this week, falling 10 percent to €5.3. UN credits derive from endorsed projects that mitigate emissions in a number of developing countries.

Since June, carbon prices have fallen by more than 50 percent amid Europe’s worsening debt crisis. With the EU carbon market flooded with millions of permits, analysts are not expecting demand for permits to overtake supply for another decade. “The oversupply seems to be overwhelming,” one trader told Reuters.
 

 

Images: Climate Action Stock Photos