Document summary
Deutsche Bank updates its base case for EUA prices under the EU’s current 20% target and for the first time sets out its base case for prices under a potential 30% target, developing worst-case pricing trajectories for both of these scenarios. Given the heightened regulatory risk on the use of offsets in the ETS now mooted at EU and UN levels the bank foresees a greater risk that their worst-case scenario for the 20% target might actually become their base case within the next few months, implying EUA carbon prices of €25/t or more by year-end 2010 or early 2011.