Germany backs plan to shore up carbon price

The cap-and-trade permit system is the EU’s flagship policy for meeting its climate goals by regulating emissions at 11,000 industrial and power installations. (Reuters)
Updated 28 February 2017

Germany backs plan to shore up carbon price

BRUSSELS: Germany will back a plan to strengthen carbon prices, a senior official said on Tuesday, ahead of a meeting of EU environment ministers on balancing the needs of industry with cutting emissions in reforming the carbon market.
EU member states such as Germany, Italy, Austria and Greece are prioritizing measures to ensure that regulation does not drive big industry abroad, while poorer, coal-reliant nations in Central and Eastern Europe are keen to get the most generous provisions possible to help modernize their economies.
Last week the European Parliament (EP) adopted a draft reform of the EU’s emissions trading system (ETS) and environment ministers meeting in Brussels are keen for swift adoption of what will be its first big piece of climate legislation since the EU ratified the Paris accord on global warming.
The cap-and-trade permit system is the EU’s flagship policy for meeting its climate goals by regulating emissions at 11,000 industrial and power installations. It has suffered from excess supply since the financial crisis, which depressed prices.
But EU nations are divided over the level of ambition in measures to strengthen prices, how much protection industry needs to remain competitive and how best to manage funds to help laggards modernize their economies.
Sweden and France are leading a push to shore up carbon prices by doubling the rate at which the scheme’s Market Stability Reserve (MSR) soaks up excess allowances and a mechanism for canceling surplus permits after five years.
Although 10 nations back this plan, EU diplomats had feared it would not carry enough weight without Germany’s backing. A minimum of 16 member states is required to back the compromise deal, representing at least 65 percent of the total EU population.

“The MSR has to be strengthened, we support that,” Jochen Flasbarth German state secretary for the environment told journalists ahead of Tuesday’s meeting. But big differences remain on other aspects of the reforms: “We have a lot to discuss ... with a bit of flexibility we can get there.”
The ETS is the EU’s main tool to achieve its goal of a 43 percent cut in greenhouse gases from industry and power plants compared with 2005. If ministers fail to find common ground, they will next take up the issue in June, delaying reforms.
“Europe has to keep its leadership in the climate arena,” French Environment Minister Segolene Royal told reporters. “We have to protect our industries but only up until a certain point, without it leading to a fall in the carbon price.”


Oil prices ‘likely to remain static despite output cuts’

Updated 01 October 2020

Oil prices ‘likely to remain static despite output cuts’

  • Survey points to uneven recovery with demand under threat from rising coronavirus cases

BENGALURU: Oil prices will stay near current levels this year as rising novel coronavirus cases threaten to slow the pace of demand recovery and counter output curbs by top producers, a Reuters poll showed on Wednesday.

The survey of 40 analysts and economists forecast benchmark Brent crude averaging $42.48 a barrel in 2020. That compares with an average of $42.54 this year and last month’s forecast of $42.75. Brent is projected to average $50.41 in 2021.

The 2020 US crude price outlook was at $38.70 per barrel versus $38.82 predicted in August. It has averaged $38.20 this year.

“As long as there is no working vaccine available, the main risk for oil prices is lower-than-expected demand,” Hans van Cleef, senior energy economist at ABN Amro said.

Global demand was seen contracting by 8 million-9.8 million bpd (barrels per day) this year, slightly less bleak than the 8 million-10 million bpd consensus last month.

“Demand recovery should still continue in our view, although at a slower pace with the easiest demand gains behind us,” said UBS analyst Giovanni Staunovo.

The recovery “will remain uneven”, he added.

Brent prices are on track for their first monthly decline in six as rising coronavirus infections across many regions, including Europe and the US brought new restrictions, while global cases surpassed 33 million.

The International Energy Agency this month cut its 2020 demand forecast by 200,000 bpd to 91.7 million bpd.

But production cuts led by the Organization of Petroleum Exporting Countries (OPEC) and its allies will offer some support to prices, analysts said, with the group curbing output by 7.7 million bpd.

“We suspect compliance with the OPEC+ deal will remain patchy but doubt that this will prevent the group from extending or even deepening its output cuts later this year,” Capital Economics analyst Caroline Bain said.