Phase 2 EUAs rise on poor environmental data for Phase 1
EUAs for delivery in December 2008 are going up. The ECX contract closed at 24.44 Euros yesterday – the highest it has been since last June.
One of the key reasons behind the strong price is that emissions from the industries covered by the EU ETS were recently found to have risen in 2007. Credits were overallocated in Phase 1 (ending 2007), which meant that the EU ETS did not require the heaviest industries to make any reduction. While this reflects badly on the EU ETS, it sent a bullish signal to the Phase 2 market because rising emissions indicates higher demand for credits.