Text updated - February 2011: The following graph shows how the price of carbon dioxide has varied over the six years that the European Union Emissions Trading System (EU ETS) has been in operation. Values have been tracked from a website operated by the European Energy Exchange, but other exchanges such as NordPool (now owned by NASDAQ) and ICE ECX can also be used. Traders including Point Carbon and Bloomberg's New Energy Finance publish such data for a fee.
Spot Price of EUAs - €/tonne Carbon Dioxide
Source : CARBIX, http://www.eex.com
Phase 1 of the scheme ran from April 2005 until March 2007. After firming during the first year of trading, prices collapsed when the market determined that too many allowances had been allocated - see a previous discussion on reporting emissions. Prices recovered at the start of Phase 2, peaked at around €28/tonne in August 2008 and then collapsed again as the economic downturn and reductions in demand (in sectors such as pulp, paper and cement, but not power) encouraged companies to off load surplus permits. Prices fell to as low as €8 by early 2009, but have since held at €13-15/tonne. The UN's climate change conference convened in Copenhagen (December 2009) and even recent efforts by computer hackers to steal allowances from the emissions registry (January 2011) have had little impact on this pricing trend. Phase 2 of the scheme will run until 2012.
The volatility and low price of carbon dioxide remains a significant issue for a number of reasons (of which more in a later blog):
- It continues to provide little incentive for operators or new entrants to invest in more carbon efficient facilities.
- Accounting effort continues to focus on trading the contingent liability and the impact this has on the profit and loss account, rather than the balance sheet and any potential return on investment.
For a detailed review of the forces driving the price of carbon dioxide in 2010 and forward into 2011, download the annual report from the Point Carbon website.