Analysts raise EU carbon price forecasts on market reform plans

Analysts have raised their European carbon market average price forecasts after the European Commission unveiled a package of policies to implement its climate targets, including reforms to limit the number of carbon permits available. EU Allowances (EUAs) are expected to average E52.01 a tonne in 2021 and E62.26 in 2022, a Reuters survey of eight analysts showed. That is up 12.4% and 11.8% respectively from forecasts made in April. The average forecast for prices in 2023 was 61.49 euros a tonne, representing a 9.4% increase. The EU’s Emissions Trading System (ETS), which forces manufacturers, power companies and airlines to pay for each tonne of carbon dioxide they emit, is central to EU efforts to cut net greenhouse gas emissions by 55% from 1990 levels by 2030. To help meet the target the EC earlier this month proposed to widen the ETS to include shipping, curb the number of permits given to industry for free and reduce the number of permits in circulation each year at a faster rate than currently. The proposal would also strengthen the ETS “market stability reserve,” which removes excess permits from the market to try to prevent them depressing prices.<br/>