The EU's efforts to strengthen the ETS emissions trading system will begin to yield results. Only this year, the price of European emission allowances has risen by just over 120 percent. On Tuesday, the price of a European emission allowance (EUA) increased by another five percent and is currently being traded at 19.70 euros, which is the highest level of ten years, writes VA Insight.
The analysts say that the upward trend will last. Several price forecasts indicate that the price may increase to between 35 and 40 euros next year.
The market is expected to get an extra boost of ongoing discussions to tighten up the EU emission target by 2030. Today, the emission reduction target is set at 40 percent compared to 1990 levels. According to the EU Commission, within the existing cost framework, it would be possible to raise the ambition level to 45 percent.
A spokesman for Energy Commissioner Canete states that the Commission just started talks with the member states in order to achieve an ambition.
Higher emission costs are good news for power producers with a lot of nuclear power and renewable in the product portfolio while reducing the price gap between gas and coal-produced electricity. According to current forecasts, the emission cost of a megawatt power plant will be around seven euros already next year.
However, everyone is not as satisfied. In Germany, several industry representatives expressed concern that development threatens to lead to unsustainable energy prices and put the country's industrial competitiveness at stake.
Source: VA INsight
