Europe’s carbon market is set to lose a third of its value this year as an oversupply of permits worsened, battering average prices and increasing pressure on European governments to provide support.
The world’s biggest carbon scheme, the European Union’s Emissions Trading System (ETS), was valued at a record $148 billion last year by The World Bank but analysts say that is likely to have fallen to around $100 billion, a level not seen since 2008.
“The EU market’s value in 2012 is set to decrease by around 30 percent, to near $100 billion,” said Matteo Mazzoni, carbon analyst at Nomisma Energia, citing a drop of over 40 percent year on year in average EU carbon prices.
Analysts at Thomson Reuters Point Carbon also see a 30 percent drop in value. According to their preliminary estimates, the ETS was worth around 50 billion euros ($66.07 billion) in 2012, down from 76 billion euros last year.
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