The International Energy Agency has warned that the price of carbon credits will need to reach $50 per tonne of CO2 by 2020 and $110 by 2030 to make high-tech solutions to climate change economically attractive. Carbon permits now trade at less than $2 a tonne in the European Union.
So what does that mean for airlines now entering the EU ETS? We at GreenAviation believe that the legislators, with an unlikely and unintended “alliance” between the financial community and environmental lobbyists will in their own interest place pressure on the EU and Member States following the failure of the Copenhagen COP15 meeting in December. The EU is likely in 2010-11 to take steps to bolster their own commitments to tackling climate change and cold result in a tighter carbon market. Howeverthis needs to be counter-balanced in the short term since there are likely to be some downward pressures on the carbon price such as surplus permits from Bulgaria starting to enter the EU market from February 2010 onwards. Medium term onwards, and with a recovering economy, and oil price, are likely to give support to the carbon price.
We think that EUAs in the EU ETS may be back at their “natural” level of EUR 30+ by 2012/13. Regardless of any forecast which could be way off the mark, all airline CFO / COOs really need to do their own homework and consider taking specialist investment advice and decide if, and how much, carbon they should be purchasing in 2010 to build up their carbon account for CO2 compliance in 2013. Or should they wait until 2013 and buy at auction or on the open market? What other options do aircraft operators have for minimising their ETS costs and risks?
Green Aviation International’s highly expert, impartial “Aviation ETS Solutions” department can help aircraft operators make very clear sense of all this. Just contact us here for a completely confidential, expert, impartial evaluation with no obligations whatsoever.
To get the IAE report and related information go to their site here