CER prices rise on EU demand

Monday, 13 August 2007

[€=euros]

The prices of issued CERs on the growing secondary market have seen substantial rises from mid-July, reversing falls in June. CERs tracked the upward movement in EUA prices in Europe, and also benefited from a sudden switch by EU carbon market players from EUAs into CERs.

As confidence grows in the prospects for a freely exchangeable CER market from sometime in 2008, carbon market speculators and emitters alike in Europe jumped at the chance to swap EUAs for cheaper CERs – both acceptable for compliance under the EU ETS and each representing one tonne of CO2e emissions.

As a result, the price of CERs as a percentage of EUAs has climbed from around 68 per cent in early July to over 80 per cent by mid-August, as tracked by Tradition Financial Services. On August 16, the closing price quoted for the CER Dec 08 forward contract on the Nord Pool exchange was €16.50, up from €13.50 a month before. The forward price curve has gone into backwardation with Dec 09s at €15.90 and the Dec 08-12 strip trading around the €16 mark.

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