UN Emission Credits ‘May Drop to Almost Zero’

by | Oct 31, 2012

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Orbeo has said prices for United Nations emission credits may drop to almost zero this year, Bloomberg News reports.

Orbeo, a carbon-trading company owned by Solvay Energy Services, also predicts a possible rebound after 2015.

Investors are dumping the UN greenhouse-gas credits known as Certified Emission Reductions, Orbeo senior manager Dorothy Denis tells the business publication.

The price of CERs for December has dropped 85 percent in the past year because the market has an oversupply of credits. But Denis says prices could rise to between $13 and $26 a metric ton after 2015 if some carbon markets are linked as part of a global agreement.

Analysis published last month by Thomson Reuters Point Carbon said the emissions offset market is oversupplied by 13 billion metric tons of carbon dioxide, more than 1,000 times greater than the anticipated demand of 11.5 million mt.

Bloomberg also says that, according to Jacopo Visetti, director and head of trading and carbon finance at London’s AitherCO2, the supply of CERs in the eight years through 2020 will be about 7.1 billion tons, while demand may reach 1.8 billion tons.

The emissions-offset forecasts come as the UN’s Clean Development Mechanism, designed to lower greenhouse-gas emissions in developing countries, is slated to be revamped in 2013, after the first commitment period of the Kyoto Protocol expires this year.

Late last week Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change, said it would make “a big difference” in global climate talks if Australia signed up for the second Kyoto commitment period, which runs from 2013 to 2017, the Australian Broadcasting Corporation reports.

Climate treaty negotiations are set to resume in Doha, Qatar next month.

Image Credit: Orbeo

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