BGC’s Ingram Says EU Carbon System Is Unattractive Quasi-Market

Mike Ingram, market strategist at BGC Partners Inc. in London, comments on the EU carbon market by e-mail.

On how the EU could boost trading in its carbon market:

“To encourage more volumes, the EU needs to get the allocation right at the outset of the allocation phase as the U.K. largely did, and subsequently refrain from targeting a price level politicians arbitrarily deem to be healthy.”

On how to increase carbon prices:

“Give up trying to repair the quasi-market that is phase two. Write it off as another mistake, like phase one was, and concentrate on getting phase 3 tight. Doing so will let the market settle into double digit territory as intended, allowing market makers to operate an economically viable business and promoting green projects, rather than focusing on costs. This in turn would allow brokers to once again offer a service that requires skill rather than act as a glorified exchange screen.”

On whether brokers will return to the market:

“My personal opinion is that the market in its current form looks unattractive relative to other more established and less policy-dependent markets. However, should the current teething problems be addressed there is no reason why it shouldn’t be considered by new entrants.”

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