• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes Middle East on brink: Oil tankers attacked off Oman
  • 8 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 13 hours Here We Go: New York Lawmakers Pass Aggressive Law To Fight Climate Change
  • 34 mins The Inconvenient Truth Of Electric Cars
  • 2 hours Climate change & Wildfires: More Wildfires To The Western U.S., Will Affect Tens Of Millions Of People
  • 2 hours Hard To Believe: UAE Will Work To Defuse Middle East Tension
  • 4 hours Oil Demand Needs to Halve: Equinor
  • 3 hours Iran downs US drone. No military response . . Just Completely Destroy their Economy. Can Senator Kerry be tried for aiding enemy ?
  • 2 hours Cherry Picking Climate Data
  • 35 mins The Plastics Problem
  • 13 hours Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 15 hours Is $60/Bbl WTI still considered a break even for Shale Oil
  • 4 hours Green vs. Coal: Bavaria Seeks Fast-Track German Coal Exit in Snub to Merkel Plan
  • 10 hours Solar Panels at 26 cents per watt
  • 15 hours Ireland To Ban New Petrol And Diesel Vehicles From 2030
  • 9 hours Huge UK Gas Discovery
  • 11 hours Section 232 Uranium
Are Oil Markets At A Turning Point?

Are Oil Markets At A Turning Point?

Oil prices rebounded on Tuesday…

EU Slashes Carbon Permits, Increasing Cost of Pollution

The European Union’s move to prop up the price of carbon pollution in its greenhouse gas trading market could result in significant increases in carbon prices. The EU slashed in half the amount of carbon permits it will auction off this year, and the smaller supply could force prices up by 34% this year, according to a median survey of analysts put together by Bloomberg. The EU will take the extra permits and “backload” them, or reintroduce them into the carbon market at the end of the decade.

The EU carbon market, the world’s largest, is valued at about $47 billion. Around 13,000 factories and utilities are required to participate. They must obtain enough permits – each equivalent to the right to emit one metric ton of carbon pollution – to offset their annual emissions. If they do not, they must pay a fine. On the news that the EU will backload permits, the price to emit a metric ton of carbon jumped by 10% to 4.85 euros, or $6.65. The price hit a 9 month low at the end of March. A Reuters survey suggests that prices could rise to around 6.95 euros in the second quarter, and then further to 7.55 euros in the second half of 2014. Higher prices will increase costs to heavy industry, as well as producers and users of oil, gas, and coal.

The move was seen as necessary to give the carbon market teeth, after years of oversupply. The sluggish European economy, coupled with real declines in emissions, have led to a glut of permits. With emissions low and permits well-supplied, the price cratered.

The EU may consider longer-term fixes to the carbon market such as automatic cuts in permit supply. While the bloc had originally planned to implement those fixes starting in 2021, a few member countries such as Germany and Denmark support an earlier move, perhaps as soon as 2016.

By Charles Kennedy of Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News