Analysts have raised their forecasts for carbon prices in the EU Emission Trading System (ETS) to 2020 after a bullish start to the year and on expectations that plans to reform the market will significantly curb oversupply. Analysts expect EU Allowances (EUAs) to average 18.59 euros/ton in 2019 and 20.76 euros/ton in 2020, according to the survey of eight analysts by Reuters published on Monday. The forecasts were up 34 percent and 13 percent, respectively, from prices given in April, when the forecasts were for 13.86 euros for 2019 and 18.36 euros for 2020. Analysts also for the first time gave forecasts for 2021 which averaged 21.88 euro/ton, almost 30 percent higher than current trading levels for the benchmark European carbon contract.
The European Union’s Emissions Trading System (ETS) charges power plants and factories for every ton of carbon dioxide (CO2) they emit. The ETS has suffered from excess supply since the financial crisis, but this will be addressed by new measures starting from 2019, such as the Market Stability Reserve which will remove some of the surplus allowances from the market. Reuters