Carbon-Emissions Prices, markets & analysis
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Carbon emissions Transcript
The ICIS European Daily Carbon Markets report also known as EDCM report is a two page report that follows price movements in the emissions market, which is important information for energy companies.
Carbon is a big part of the cost of running a plant so they need to know the daily prices of these commodities called EU allowances, EU airline allowances certified emission reductions and emission reduction units.
ICIS publishes daily price assessments of all four and adds contracts as they become liquid.
The ICIS Daily Carbon Markets report is useful because it is short, concise and clear.
Everything flows out from price reporting and we only cover market-moving news. If it’s in EDCM then it’s worth knowing.
How we can help
Carbon-Emissions news and market information products from ICIS
We offer the following regional Carbon-Emissions analysis and news coverage to keep you informed of factors and developments affecting prices in the Carbon-Emissions marketplace.
Price Reporting – More information about the price reports we publish on Carbon-Emissions
Independent price assessments and market coverage by region
Price History – More information about the historical price data we publish on Carbon-Emissions
Track historical price data
News & analysis
News & Analysis - News & market analysis specifically relating to Carbon-Emissions
Breaking news of latest developments affecting the markets.
Insight and analysis of factors driving prices.
Carbon-Emissions: Market overview
EU: The carbon price is expected to recover somewhat in coming months, once speculation has died down following the compliance deadline in May, as back-loading has reduced the number of allowances offered to the market on auction. All eyes will also be on the EU elections which promise a new European Commission, Parliament and Council, to name but a few bodies. The election outcome will produce a new regime that will decide over the future of the EU emission trading system and whether to make permanent changes to the market’s structure in a bid to deal with the oversupply that has suppressed prices in recent years.
US: While the Californian carbon market is still in its early stages, the Regional Greenhouse Gas Initiative (RGGI) has seen a surge of interest on the secondary market. Over 3.4m RGGI allowances have been traded since the start of April, and prices have risen 5 cents, or about 1%. Traders have a very bullish outlook for the market, and some believe prices could rise even higher after the 4 June auction. The market is also eager to see how New Jersey, which previously was part of RGGI, may react after a court ruled that it improperly left the cap-and-trade program.
China: After the recent start of several pilot emission trading systems in China (including Hubei, Shenzhen, Shanghai, Beijing, Guangdong and Tianjin), Chongqing is the only one still due to launch. Four of the existing pilot systems are in the process of adjusting the number of allowances allocated to companies in 2014, based on the feedback from covered entities in the first compliance year. This could see the individual carbon markets becoming tighter, if the government resists accommodating growing output with an upwards adjusted allocation.
Updated to mid-April 2014
News & analysis
Carbon-Emissions news & analysis
ICIS price assessments are based on information gathered from a wide cross-section of the market, comprising consumers, producers, traders and distributors from more than 250 reporters world-wide. Confirmed deals, verified by both buyer and seller, provide the foundation of our price assessments.
Our in-depth market knowledge drives our specialist focus, as we recognise the importance of individual market dynamics and not a one-size-fits-all approach.
Over 25 years of reporting on key chemicals markets, including Carbon-Emissions, has brought global recognition of our methodology as being unbiased, authoritative and rigorous in preserving our editorial integrity. Our global network of reporters in Houston, London, Singapore, Shanghai, Guangzhou, Mumbai, Perth and Moscow ensures unrivalled coverage of established and emerging markets.
European Daily Carbon Markets Methodology
- One allowance enables a facility to legally emit a specific amount of pollution
- One credit represents one designated unit of pollutant, e.g. 1 tonne of CO2
- Allowances are created and auctioned or allocated by the ETS’s governing authority, e.g. the EU
- Allowances are typically designated a specific time stamp, or period within which they are valid, such as a specific year
- The total number of allowances in an ETS cannot exceed the cap set by the governing authority
- The number of allowances under a cap should decline over time to create an incentive for polluters to cut emissions
- Allowances tend to be more expensive or hold a premium, because their issuance is regulated and backed by the governing authority
- One offset enables a polluter to pay someone else to pollute on their behalf
- One credit represents a reduction in emissions of CO2 to compensate for or to offset an emission made elsewhere
- Depending on the regime, offsetting has to be done internationally or domestically
- Offsets are used in both the compliance market (e.g. EU ETS) as well as the voluntary market
- Offsets are typically achieved through financial support of projects that reduce the emission of greenhouse gases (GHGs) in the short or long term
- Offsets typically render the cost of compliance with an ETS cheaper
- Offsets tend to be cheaper, because of the associated risk related to project approval, potential invalidation and actual issuance of credits
The EU Emissions Trading System (ETS)
- Largest and most mature carbon market globally
- Launched in 2005, now in third phase (2013-2020)
- Compared with 2005, the proposed cap for 2020 represents a 21% reduction of greenhouse gases
- Across 28 EU countries and three EEA-EFTA states (Iceland, Liechtenstein and Norway)
- Covers around 45% of EU GHG emissions from: power and heat generation; energy-intensive industry sectors including oil refineries, steel works and production of iron, aluminium, metals, cement, lime, glass, ceramics, pulp, paper, cardboard, acids and bulk organic chemicals; commercial aviation
- More than 11,000 heavy energy-using installations in power generation and manufacturing industry
- Flights to and from the EU and three EEA-EFTA states
- Divided into several trading periods, that place an ever-growing burden on polluters:
- 1st trading period (January 2005 to December 2007)
- 2nd trading period (January 2008 to December 2012), coinciding with the first commitment period of the Kyoto Protocol
- 3rd trading period (January 2013 to December 2020)
- setting of an overall EU cap, with allowances allocated to EU members
- tighter limits on the use of offsets, e.g. quality restrictions
- move from free allocation of allowances to auctioning; auctioning now default method for allocating allowances
- In 2013, more than 40% of allowances will be auctioned and the share will rise progressively each year
- For allowances still given away for free, harmonised allocation rules apply, based on EU-wide benchmarks of emissions performance
- Power producers in some countries still get free allocation under a derogation;
- Covered entities have to report their emissions and submit the equivalent in terms of permits once a year.
- The EU ETS has a growing surplus of allowances, largely because of the economic crisis, which has depressed emissions more than anticipated:
- Surplus risks undermining the orderly functioning of the carbon market (short term); could affect the ability of the EU ETS to meet more demanding emission reduction targets cost-effectively (long term)
- Commission has taken the initiative to postpone (or 'back-load') the auctioning of some allowances as an immediate measure, while also launching a debate on structural measures that could provide a sustainable solution to the surplus in the longer term.