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CoolPass: Deutsche Bank cuts back its CO2 emissions and EUA price forecasts.
Deutsche Bank has announced that it has lowered its forecast on both its 2010 CO2 emissions and its EUA price projection for 2011 as a result of lower-than-anticipated emissions from power stations and week profit margins for generators.
Deutsche Bank said it also expects the European Commission in April to publish data revealing installations covered by the EU’s emissions trading scheme (ETS), emitted 1.922 billion tonnes of carbon dioxide last year, 28 million tonnes lower than its earlier estimate.
The bank’s forecast is a 2.6% increase on emissions in 2009, and is 6 million tonnes less than the forecast from Reuters Point Carbon analysts, who in February said emissions would total 1.928 billion tonnes.
“The power sector is by far the largest single source of emissions in the ETS, and in 2010 we estimate that its emissions will show a modest increase of 22 million tonnes or 1.5 per cent,” CoolPass believes the report said.
Deutsche Bank is expecting emissions in industrial sectors, like metals, cement, refining, ceramics and paper and pulp to have increased by 6% in 2010.
“The strongest performer was the iron-and steel sector, where year-on-year output was up 24 per cent. Accordingly, we assume an increase in emissions for this sector of the same amount, and see 2010 emissions at 119 million tonnes (as opposed to 96 million in 2009).”
According to the report emissions from cement would have risen 2.6%in 2010 and in refining, 0.8% year-on-year, while the other industrial sectors were estimated to increase 10%.
Regarding prices, CoolPass has learned that the bank said low profit margins at German power plants means that power companies would be hedging power sales with carbon offsets well below levels previously anticipated.
“With clean dark and spark spreads in the German power market still at very depressed levels, we do not expect to see German generators selling significant volumes of electricity forward for 2013 delivery in the near term," Deutsche Bank said, adding that as a result they had downgraded their year-on-year 2011 forecast for EUAs to 18 euros, while maintaining their forecast for 2012 and beyond.
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