EU Carbon Price Expectations Plunge 47% in a Year, IETA Says

European Union carbon price expectations through 2020 have fallen 47 percent since last year, the International Emissions Trading Association said.

Prices will average 10 euros ($13) a metric ton in the period, according to an IETA survey of 73 members, the lobby group that includes EON AG and BP Plc (BP/) said in an e-mailed statement. That compares with 19 euros a ton last year, Jeff Swartz, international policy director at Geneva-based IETA, said yesterday by phone.

EU carbon fell 50 percent in the past year as regulators struggled to deal with a glut in the market, the world’s biggest by traded volume. An agreement by United Nations envoys in December to extend the Kyoto Protocol and cap emissions for another eight years until 2020 at climate-protection talks in December in Doha failed to bolster demand, Dirk Forrister, president of IETA, said in the statement.

“The agreement in Doha to extend the Kyoto Protocol did little for long-term confidence,” he said. “Overlapping energy and climate policies, at both EU and national level, are suppressing the demand in the EU emissions trading system. Without reform, confidence in the carbon market will continue to be undermined.”

Four out of five respondents said that domestic or regional policy initiatives will probably be more important than international negotiations over the next five years, according to IETA. Fifty-six percent of respondents expected EU prices from 5 to 10 euros a ton, IETA said.

EU businesses face a patchwork of taxes, regulations and the carbon market, raising concern that the bloc may struggle to compete against other regions as emitters are confronted with high administrative costs, Jonathan Grant, director in London of the sustainability and climate change unit at PricewaterhouseCoopers LLP, an IETA member, said in the statement.

‘Still Relevant’

“Despite the collapse of carbon prices, it’s reassuring that all regulated entities surveyed said that the carbon price is still relevant to their capital-investment decisions, with four out of five saying it is an important factor,” he said.

In California, carbon allowances will probably average from $10 to $20 a ton through 2015, according to the survey.

EU allowances for December rose 4.3 percent yesterday to 3.60 euros a ton on the ICE Futures Europe exchange in London.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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