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| CO2 market set for roller coaster two years: European trade group |
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2008-2-25 Platts [ views:
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| Brussels--21Feb2008 Carbon dioxide prices are likely to be extremely volatile over the next two years as the market reacts to indications of what kind of post-Kyoto climate agreement could be negotiated by the end of 2009, a senior business executive told the European Business Summit in Brussels Thursday.
"People take a negative view of the international £Ûclimate£Ý talks, but I
believe we will get there in two years," said Nick Campbell, environmental
manager of chemicals group Arkema and chair of trade association
BusinessEurope's climate change working group.
Governments agreed at last December's Bali summit to negotiate a follow-up international climate agreement to Kyoto by end-2009.
But media reporting of the negotiations could cause extreme market signals, warned Campbell.
"If the market responds to every £Ûnegotiating£Ý statement reported, there will be horrendous £Ûprice£Ý movement," he said. "We need to be aware there will be amazing volatility over the next two years."
People could expect more volatility in the next two years than in the last two, said Seb Walhain, director of environmental markets at Belgian bank
Fortis.
Uncertainties over big countries' and blocs' attitudes to Kyoto third country joint implementation and clean development mechanism carbon credits would add to this volatility, he said.
"The US has a big trade deficit with China and doesn't want to buy carbon credits from Chinese industrial gas CDM projects, he told Platts. "It prefers
Latin and central American forestry CDM credits."
The EU, meanwhile, has proposed a limit on how many CDM credits can be used in its emissions trading scheme to 2020.
"If there is a rumor of US interest in buying Chinese CDM credits, £ÛCO2£Ý prices will go up," said Walhain. "And if there is a rumor that the EU will
allow more CDM credits in its ETS, prices will go down."
US special envoy for EU affairs, Clayland Boyden Gray, said he was "cautiously optimistic" that China and India would be brought into an international
agreement.
"The US does not look askance at CDM credits that come from countries that have agreed on emission limits," he said.
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