The Best Time for EU Industries to Invest in Abatement Technologies is Now, Says Frost & Sullivan
LONDON – Phase II of the European Union Emission Trading Scheme (EU ETS) and the global economic downturn have commenced around the same time. The most affected industries had to undergo production cuts and significant layoffs in an effort to reduce their costs. This resulted in lower emissions, and consequently, reduced the European Union allowance (EUA) price.
New analysis from Frost & Sullivan (http://www.energy.frost.com), EU ETS during the Financial Crisis: Phase I Results and Execution of Phase II, looks into actions taken by participating countries to achieve their targets and analyses the high carbon emitters’ response to stricter targets imposed on them by national governments.
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Steel makers, pulp manufacturers, and other heavy industrial companies have announced a reduction in their 2009 production plans, which imply the oversupply of carbon allowances that may bring the EUA spot price down to as low as €6 in 2009. The low EUA price may delay companies’ decisions to invest in clean technologies. In 2009 to 2010, the participating industries are most likely to concentrate on battling the negative effects of the financial crisis rather than on lowering their emission levels.
“A low EUA spot price in 2009-2010 could make companies defer investments in abatement technologies,” says Frost & Sullivan Research Analyst Zeinegul Hassan. “However, the regulations in 2013 will get more stringent and the higher cost of carbon allowances in the future is anticipated to adversely affect the budgets of companies that delay their investment decisions in phase II.”
Regardless of the current economic and financial circumstances, a sensible approach for high polluting companies is not to divert investments from abatement technologies, while continuing to clean up their carbon act, as the costs of carbon permits will soar in the coming years.
“If the participating industries opt to transfer their allowances to phase III instead of selling their surplus in 2009 and 2010, the EUA price may well go above €15 and provide a financial stimulus for industries to invest in cleaner technologies,” explains Zeinegul.
EU ETS during the Financial Crisis: Phase I Results and Execution of Phase II is part of the Energy & Power Growth Partnership Services programme, which also includes research in the following markets: Clean Coal Technologies - A Strategic Snapshot, Strategic Assessment of the European Market for Alternative Energy Storage Solutions, European Genset Emissions Strategic Analysis, and Global Economic Outlook: The European Green Energy Industry: Opportunities in 2009 and the Road to Growth. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
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