EU carbon market expects price rise for first time in four years

The sun rises behind the billowing chimneys of a power station in Berlin, November 27, 2013. REUTERS/Thomas Peter (Reuters)

By Nina Chestney LONDON (Reuters) - Participants in the European Union's carbon market expect average prices to rise for the first time in four years, an annual survey published by the International Emissions Trading Association (IETA) showed on Tuesday. The survey conducted by PwC drew on responses from 122 IETA members including utilities, trading houses and banks. Respondents anticipate an average EU carbon price of 10.79 euros ($11.76) per metric ton (1.1023 tons) in the third phase of the Emissions Trading System (ETS), which runs from 2013 to 2020. That was 2.50 euros above expectations last year and marked the first time respondents have expected a rise since 2011, IETA said in a statement. The benchmark EU carbon price is currently trading at around 7.30 euros per metric ton. Respondents expected an average price of 18.40 euros a metric ton from 2020 to 2030. "Sentiment in the EU ETS is really on the rise for the first time in four years," said Jonathan Grant, director of sustainability and climate change at PwC. However, expected prices fall short of the 29 euros per metric ton that respondents say is needed to drive low-carbon investment. The survey also showed that carbon market participants believe a legally binding United Nations climate deal is the most desirable, but least likely, outcome of talks to be held in Paris at the end of this year. Almost 200 governments are due to meet at a summit in Paris from Nov. 30 to Dec. 11 to agree a deal to slow global warming. French President Francois Hollande said last week he was concerned about a lack of progress towards a deal. Some 58 percent of the IETA survey's respondents, however, think carbon markets across the world will expand as a result of an agreement in Paris. (Editing by Jason Neely and Dale Hudson)