The European Carbon Market: The Impact of Higher Carbon Prices on Utilities and Industries

As the EU ETS experienced prices above € 20/tCO2e for the first time since 2011, this Market Insight explores whether the increasing carbon prices have been high enough to reduce emissions in 2018.

ICIS outlines the likely developments of carbon prices in the next five years trying to answer to two fundamental questions: will the new reforms create scarcity and lift carbon prices even more? And in case of higher carbon prices, how industries and utilities will be impacted?

This Market Insight by Philipp Ruf and Matteo Mazzoni explores the effect on the 6 biggest power markets – Germany, France, UK, Italy, Spain and Poland.

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Government Agency / MinistryIndustry AssociationRegulatorStatutory BoardOther
AcidsAlcoholsAromaticsBase Oil / Lubes / Motor OilButadiene / C4 / ElastomersFertilizers / Agri ProductsFibre ChainIntermediatesOlefinsOleochemicalsPhenolics, Chlor-alkaliPolymers / Polyolefins / ThermoplasticsSolventsSurfactantsNaphthaPolyurethane chainSpecialty ChemicalsOther
Carbon EmmissionsCrude OilLNG / Natural GasRefinery By-Products / Petroleum / LPGNaphthaCoal / HydrocarbonGasoline / Jet Kerosene / Fuel OilsPower or ElectricityAcidsAlcoholsAromaticsBase Oil / Lubes / Motor OilButadiene / C4 / ElastomersFertilizers / Agri ProductsFibre ChainIntermediatesOlefinsOleochemicalsPhenolics, Chlor-alkaliPolymers / Polyolefins / ThermoplasticsSolventsSurfactantsPolyurethane chainSpecialty Chemicals
Carbon EmmissionsCrude OilLNG / Natural GasRefinery By-Products / Petroleum / LPGNaphthaCoal / HydrocarbonGasoline / Jet Kerosene / Fuel OilsPower or ElectricityOther
Asset ManagementBrokerageCommodity TradingExchange / Trading PlatformFinancing / LoansInvestments / AcquisitionsInsuranceOther
ChemicalsFertilizers / Agri ProductsCrude OilRefinery By-Products / Petroleum / LPGCoal / HydrocarbonLNG / Natural GasGasoline / Jet Kerosene / Fuel OilsNaphthaGeneral Shipping / Ship BrokingOther Consumer Products and ServicesOther Industrial or B2B Services
Polymer compounders / MasterbatchesAuto Parts / Automobile / TransportFoams / Insulation MaterialsElectronicsFood and BeverageFurniture / Appliances / Home FinishingsMedical / PharmaceuticalPaints / Adhesives / Dyes / Pigments / Epoxy ResinPersonal Care / Soap / Cleaning ProductsPackaging Materials / Plastics OEMPipes / Tubes / Gaskets / Sealants / CablesPulp / PaperRubber Products / TyresTextiles / Yarns / Garments / FabricsOther Consumer Products and ServicesOther Industrial or B2B Services
Crude OilLNG / Natural GasOil Refinery / Refinery Gases / PetroleumNaphthaCoal / HydrocarbonGasoline / Jet Kerosene / Fuel OilsPower or Electricity ProviderMining / Metals / MineralsRenewable Energy / BiofuelsOther
AcidsAlcoholsAromaticsBase Oil / Lubes / Motor OilButadiene / C4 / ElastomersFertilizers / Agri ProductsFibre ChainIntermediatesOlefinsOleochemicalsPhenolics, Chlor-alkaliPolymers / Polyolefins / ThermoplasticsSolventsSurfactantsUpstream FeedstockPolyurethane chainSpecialty ChemicalsOther
Crude OilLNG / Natural GasOil Refinery / Refinery Gases / PetroleumNaphthaCoal / HydrocarbonGasoline / Jet Kerosene / Fuel OilsMining / Metals / MineralsAcidsAlcoholsAromaticsBase Oil / Lubes / Motor OilButadiene / C4 / ElastomersFertilizers / Agri ProductsFibre Chain IntermediatesOlefinsOleochemicalsPhenolics, Chlor-alkaliPolymers / Polyolefins / ThermoplasticsSurfactantsSolventsOther
Oil Refinery / Refinery Gases / PetroleumNaphthaAcidsAlcoholsAromaticsBase Oil / Lubes / Motor OilButadiene / C4 / ElastomersFertilizers / Agri ProductsFibre ChainIntermediatesOlefinsOleochemicalsPhenolics, Chlor-alkaliPolymers / Polyolefins / ThermoplasticsSurfactantsSolventsOther
Business SchoolUniversityOther
ConsultingEngineering / ContractorResearch / Information ServiceLaboratory / R&D FacilitySoftware / Technology ServiceOther Consumer Products and ServicesOther Industrial or B2B Services

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With two major reforms being passed by European legislators in 2015 (Market Stability Reserve) and 2018 (Post-2020 Reform), carbon prices experienced significant increases since mid-2017. Market participants anticipated the forthcoming scarcity in the EU ETS lifting the price of EUAs from € 7/tCO2e to a 11-year high of € 26.2/tCO2e at the beginning of April.

ICIS outlines the likely developments of carbon prices in the next five years trying to answer to two fundamental questions: will the new reforms create scarcity and lift carbon prices even more? And in case of higher carbon prices, how industries and utilities will be impacted?

This market insight by Philipp Ruf and Matteo Mazzoni explores the effect on the 6 biggest power markets – Germany, France, UK, Italy, Spain and Poland.

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