Confidence in the carbon market

Respondents to the Thomson Reuters Point Carbon Market Survey for this year have shown renewed confidence in the carbon market and it is set to continue throughout this year. Anders Nordeng, Senior Carbon Analyst, Thomson Reuters said, “this year’s results indicate that the increased confidence of 2014 shows no signs of slowing. 2013 saw an all time low for sentiment, with falling prices and doubts about political commitment. But things picked up in 2014 and this positive trend looks set to continue in 2015 too.”

Cap and trade

The results of the survey have reportedly shown that cap and trade is the emissions abatement instrument most participants expect to see in place in 2020, well ahead of subsidies and taxes. The respondents have revealed a slightly more positive attitude this year also: 19% believe cap and trade is an ideal emissions abatement instrument, 66% consider it the best that can be agreed on, whilst a more critical stance was taken by only 8% of respondents, who think the policy causes more harm than good.

ETS

The EU Emissions Trading Scheme (ETS) effectiveness is already becoming clear, according to findings in the report, as 51% of respondents from compliant companies said that it has led them to reduce emissions. Opinions on the cost effectiveness of the ETS have altered slightly from last year however, slipping from 52% of respondents last year to 49% this year who believe it’s the most cost effective way to reduce emissions. This is clearly an important factor for participants from compliant companies, as 45% claimed the cost of emissions is a decisive factor in investment decisions.

When asked about the impact the EU ETS has on competitiveness, 50% of respondents said it was somewhat important, but not the main cause of worry, whilst a quarter considered it among the most detrimental factors in reducing competitiveness. However, although there were mixed views on its benefits, most agreed on the EU ETS’ longevity, with two thirds of respondents expecting the EU ETS to continue to be the main instrument for EU climate policy.

China

In China where the government planning agency seems determined to introduce a nationwide emission trading scheme, 43% of the Thomson Reuter survey respondents expected to see this as early as 2017. A further 40% were confident a scheme will be launched between 2018 and 2020. Also, the respondents based in China see a much greater likelihood for an early implementation than those based elsewhere.

North America

The North American carbon market saw only 17% of respondents being confident with the US climate target being achievable under current and planned policies. 33% of survey respondents were more cautious and deemed that it might be possible, with an additional 34% believing there is no chance of reaching the target. Approximately two thirds of the North American respondents believe the EPA will face legal opposition to the implementation of the Clean Power Plan which was presented in June last year.

Expansion of the Western Climate Initiative (WCI) was another area that raised mixed opinions amongst respondents. Just over 50% expect new members to join the WCI prior to 2020, with 13% forecasting expansion after 2020. 24% believe New Jersey will rejoin the Regional Greenhouse Gas Initiative (RGGI) in the next two years.

Paris

When it came to the Paris summit to due to take place this December, 36% of all respondents consider it likely that a new international climate change agreement will be delivered, whereas 38% believe it unlikely. This split optimisation is not the case amongst participants in France however, where, as hosts, 79% have voiced that world leaders will reach an agreement on climate change; by far the most optimistic.


Edited from press release by Claira Lloyd

Published on 13/05/2015


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