DBLM Solutions

David Boles 01 4433584 (Direct) dblmdavid (SKYPE) david@dblmsolutions.com

DBLM Solutions Carbon Update

Carbon Overview

David Boles 01 4433584 (Direct) dblmdavid (SKYPE) david@dblmsolutions.com

At time of writing the Dec '13 EUA Contract was at 4.36. Carbon has held above the support level at 4.30. Trading volumes have picked up slightly in the secondary market as the effect of lower Auction volumes for the month of August kicks in. Analysts have stated that they are to overhaul their carbon forecast methods as opposing price signals still dominate the market. The fact remains that there still is a 1.9 billion allowance surplus in the market and the backloading issue which was passed by the European Parliament needs approval by individual members states before it is passed into law. There is also the spectre of Carbon market reforms hanging over the market which is set to be debated by the finish of 2013. Six reform options have been put on the table and it is still unclear which options the policy makers will choose to move forward. (see attached for proposed reforms). In addition, a global emission reduction legal policy agreement is in the pipeline as we speak. The infrastucture is set to be completed by December 2015 and adopted by 2020. This will create much ongoing political wrangling that is a theme at every Climate Conference to date and many believe that the deadline will not be met. The excuse of National competitiveness is witnessed again today. New Zealand stated they are to scale back their carbon mitigation target by between 10-20%, citing it as an interim step before the UN pact from 2020. NZ previously said its target would be influenced by global progress in tackling emissions, particularly in major developing economies such as China and India.
Dec 13 EUA

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