Research organisation

Daiwa Institute of Research

Author

Ashley Thomas

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Carbon Outlook – Recovery from Oversold Position or Dead Cat Bounce? (183kb)

Report date

February 2009

Release date

April 2009

Document summary

Since Daiwa’s December 2008 Carbon Report, the EUA December 2009 forward price has fallen from €16/tonne to €10/tonne as weakening economic conditions have reduced European industrial output and EU ETS industrials have sold forward allowances to raise finance at relatively attractive rates. Carbon price movements have become detached from oil prices. Daiwa now forecasts a 6.7% contraction in 2009 EU industrial output compared to a 2.7% decline forecast in their December report. Their forecast short position for the cumulative 2008-2020 period means the 2020 EUA forecast is marginally reduced from €25 to €24/tonne, driven by estimated summer fuel switching costs.