Deutsche Bank will raise its price forecast for EU allowances (EUAs) at the end of 2010 to €25 ($32) from €20 if its fears are realised on the supply and use of carbon offsets.
In a research note published Monday, the bank’s emissions analysts said its “worst-case scenario ... might actually become our base-case scenario within the next few months”, depending on regulatory developments.
The bank is awaiting news from the European Commission about proposals to restrict the use of offsets generated by Clean Development Mechanism (CDM) projects which destroy industrial gases. The Commission is planning to publish proposals before December on limiting their use in the third phase of the EU Emissions Trading Scheme, from 2013, in a bid to improve the environmental impact of the scheme.
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