Record surge in CO2 credits may hamper rebound
Record surge in CO2 credits may hamper rebound
More than twice as many new carbon credits were supplied to the world’s second-biggest emissions market this year, damping prospects for a recovery from record- low prices in 2012.
The UN Clean Development Mechanism will generate a record of about 320 million Certified Emission Reduction credits in 2011, up from 132 million last year, according to data compiled by Bloomberg. While a 62 percent drop in UN prices may discourage new supply, Bloomberg New Energy Finance cut its 2012 price forecast this month as it estimated the glut of so-called CERs will be bigger than previously estimated.
“The outlook for the CDM is quite gloomy,” said Matteo Mazzoni, an analyst at Nomisma Energia in Bologna, Italy, who estimates 275 million tons of CERs will be issued next year. “We believe there’s going to be a sort of slowdown given current, unattractive prices,” he said by e-mail.
A surge in CERs from projects that destroy industrial gases known as hydrofluorocarbon-23 and nitrous oxide has led to a supply glut this year. The European Union will stop recognizing most of this category in May 2013, prompting investors to issue credits to beat that deadline just as Europe’s debt crisis and a UN climate summit that failed to boost demand before 2015 exacerbate the bearish outlook for global carbon markets.
http://fuelfix.com/blog/2011/12/31/record-surge-in-co2-credits-may-hamper-rebound/
