London, 26 April 2010

Deutsche Bank has revised its EUA price forecast on a lower expectation of auctioning volume. The bank reckons the front year EUA will climb to €18-20 by the end of 2010 driven by the cost of switching from carbon-intensive coal production to cleaner gas-fired generation. This higher price level could encourage more market participants to swap their surplus EUAs with cheaper UN-backed carbon credits, pushing prompt EUA prices to as high as €25 by 2012, Deutsche said today.

“We’re now assuming that the commission is going to auction fewer EUAs than is going to be required by utilities,” Deutsche analyst Mark Lewis told Point Carbon News.

“We therefore think generators will now need to achieve a higher level of abatement over 2010-2012 than we were previously assuming,” the bank added in a report.

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By Ben Garside, Point Carbon - for Commodities Now

www.pointcarbon.com