By Mathew Carr
Dec. 5 (Bloomberg) -- Deutsche Bank AG forecast carbon dioxide output from factories and power stations in the European Union emissions-trading program, the world’s biggest, will be on average below the group’s limit in the five years through 2012.
Emissions in the period will be 2.076 billion metric tons a year, compared with a cap of 2.083 billion tons, Paris-based Deutsche Bank analyst Mark Lewis said today by phone.
Lewis slashed his forecast for 2009 emissions by 5.9 percent yesterday to 2.02 billion tons, which is 10 percent below 2007 levels. “This is quite a dramatic cut,” reflecting a likely severe recession, he said.
Allowances in the EU program last year became near worthless because the European Commission, regulator of the market, allowed governments in the region to hand out too many to factories and power stations.
Permits for the five years starting this year will “not crash to zero” because they can be used in later years, unlike those issued in the three years through 2007, Lewis said. Prices for the second phase through 2012 may fall near their 11.80 euro-a-metric-ton record low in the next few months, especially if crude oil prices drop further, he said.
Prices for this month today fell 0.9 percent to 14.68 euros a ton on the European Climate Exchange in London, which would be their lowest close in almost 21 months.
Traders should consider a likely shortage of permits through 2020 when buying and selling, Lewis said. He cut his forecast for emission cuts needed by all installations in the program on average for the 13 years through 2020 to 50 million tons a year from 86 million tons.
Lewis maintained his price forecast for EU allowances of 30 euros and said prices should rise to more than 45 euros by 2020.
To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net
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