FinSoul has learned that German Investment banking giant Deutsche Bank has added its voice to that of many market analysts who say the European Union carbon market will see significant recovery during 2010, predicting that EU emission allowances (EUAs) will regain a price of €15 to €16 ($21.75 to $23.21) a metric ton by as soon as mid 2010.
The bank released a research note recently, predicting that while it had downgraded its emissions forecast for the present phase of the European Unions emissions trading scheme (ETS) earlier, it still expected carbon prices to see a medium term recovery as energy companies hedge against the expected shortfall in emission allowances that will begin from 2013.
"We see moderate downside risk to EUAs until mid-February, but think that thereafter utility buying could see prices revert to €15–€16 per tonne by mid-year," FinSoul understands the note says. "This is because generators will have to hedge increasing amounts of 2013 power sales this year, and with the auctioning of 2013 EUAs unlikely before Q3 2011 at the earliest, they will have to buy Phase-2 EUAs instead."
The announcement echoes another recent research note by Barclay’s Capital, which too, predicted that the average EUA price in the second half of this year will reach around €15 a metric ton as businesses look to increase their stock of allowances that they can carry forward for use in phase 3 of the ETA as it starts in 2013, FinSoul understands.
The latest predictions may encourage speculators to purchase EUAs at the current price of around €13 with the aim of cashing in when prices increase ahead of phase 3.
