Recovery seen for 2009, but no floor for 2008 yet

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Continued economic backlash brings the CO2 price down to mid 2007 levels, Euro 15 and for sCER 13,80. Though for the longer term a price recovery is expected, we haven’t seen the 2008 price floor yet! That could come lower than Euro 15 next month, that was noted by IdeaCarbon as a floor.

The minimum regarded price for CDM-sCER is seen as the buffer to keep EUAs up. Nevertheless some see a floor at 5-10, other even expect 0. ABN-AMRO pointed at the fact that since banking of suplus EUAS is allowed to after 2012, the prive will not come to a single digit number.

For 2009 analists are optimistic, as power companies start to build up their compliance position for that year. Société Generale expects a price of 21-26 Euro. Pointcarbon 22 Euro.

As we can see, also the CO2 price dropped during the market crashes on Sept 11/13 and 28/30 to € 22,50 per ton of CO2. Because when the value of  financial and energy commodities decrease, so does the CO2 price. Remarkably though, the CO2 price drop is relatively small and recovered swiftly again up to € 24.

Analists agree that the CO2-markt is more and more delinked from the oil and gas price. Hence, the CO2 price depend on demand and supply on the CO2 market itself. And, especially in this crisis we see that the CO2 market become less a bank driven market but more a compliance driven market [comply with CO2 caps].

When the finacial crisis turns into an economic crises I expect a larger CO2 price drop. lower economic growth means also lower CO2 emissions en therefor less demand.