ICAP Says EU Carbon Supply Fix Is Blunt, Needs Central Overseer

Paul Newman, managing director of ICAP Energy in London, comments on EU carbon market by e-mail.

On carbon permit oversupply:

"Over recent months, we have seen EU emissions trading system prices fall in an environment of significant oversupply. The attempt to provide price stability through the ‘backending’ process has been something of a blunt weapon, because it doesn’t address the fundamental, structural issue of oversupply"

On how carbon market should be improved:

"In our view, the EU emissions-trading system will only become a meaningful and efficient environment for trading of emissions when the market as a whole has proper oversight from some kind of ‘central authority,’ with powers to intervene when the market price has moved wildly out of line with wider policy objectives." Such an agency is a well-known feature of foreign-exchange markets and would provide order and stability, he said.