DBLM Solutions

David Boles 01 4433584 (Direct) dblmdavid (SKYPE) david@dblmsolutions.com

DBLM Solutions Carbon Update

Carbon Overview

David Boles 01 4433584 (Direct) dblmdavid (SKYPE) david@dblmsolutions.com

At time of writing the Dec '13 EUA Contract was at 3.73. The gains we have witnessed since last Friday morning are due to gains in the energy complex as well as optimism surrounding the second reading of the 'backloading' carbon fix set for the start of July. Germany has published interesting energy data which should support the carbon price in the mid term. Coal consumption rose 4% and gas use was up 8% in the first quarter compared to the same period last year. This will increase CO2 demand, but remember to factor in a 3-6 month time lag. The results of a survey were published yesterday that forecast the price of Carbon would not rise above 10 for the rest of the decade. This figure is short of the benchmark needed to encourage investment in renewables, which sits anywhere between 15 and 25, depending on source material. The survey participants were a cross section of carbon players from banks, manufacturers and power generators. On Tuesday, the EU commission announced that Nations should set their GHG mitigation targets by 2014, instead of 2015 as outlined at the Climate Convention in Copenhagen. The deflated price of UN offsets is realised in their output as the world bank estimates that supply of offsets will be down 30% by 2020. Phase 3 will generate approximately1.9 billion tonnes of ERU's and CER's. This is down from the 2.7 billion tonne estimate last year. The actual demand will be 1.6 billion tonnes creating a surplus of 300 million tonnes.
Dec 13 EUA

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