United Nations Carbon Credit Prices May Rise by 42% by 2012, Barclays Says

Prices of United Nations Certified Emission Reduction credits will increase by as much as 42 percent by 2012 as new rules reduce supplies, Barclays Plc said.

CERs under the UN’s Clean Development Mechanism program may rise to about 18 euros a metric ton in two years, and to as much as 25 euros in the third phase of the European Union’s carbon- trading plan starting 2013, Trevor Sikorski, a London-based analyst at Barclays Capital, said yesterday. UN CERs for December fell 1.6 percent to 12.69 euros a ton yesterday on London’s European Climate Exchange.

The issuance of as many as 30 million tons of CERs under the UN’s Clean Development Mechanism may be delayed to next year, cutting this year’s supplies by about 30 percent,Sikorski said in an interview at the Carbon Asia Forum 2010 conference in Singapore.

Prices of CERs may average 14.5 euros a ton in the first half of 2011, and 16 euros in the second half, according to a Barclays report on Oct. 21. CDM offsets are currently used for compliance in the European carbon market, the world’s biggest.

The UN and the European Union said they may issue new rules on the methodology of issuance and acceptance of carbon credits for hydro-fluorocarbon (HFC) combustion plants and other industrial gases.

The European Commission, regulator of the EU program, plans to publish an impact assessment on offset restrictions by November and said in May that projects related to two industrial gases, HFC-23 and nitrous oxide, create significant windfall profits and may be banned after 2012. A proposed U.S. energy law bans HFC credits.

Prices of CERs, which typically track prices of European Union carbon allowances, will rise as UN restrictions will reduce supplies of HFC-linked CERs and EU rules will force utilities and other users to switch to credits from renewable energy industries, Sikorski said.

To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.