ZEW-Energy Market Barometer - Experts Expect Emissions Price Below Ten Euro

Not many enterprises will have to bear a great burden from the European emissions trading system. More than 80 percent of the participants of an expert survey conducted by the Centre for European Economic Research (ZEW) in Mannheim, Germany, see the price for carbon dioxide emission rights at the beginning of 2005, the onset of the European emissions trading system, below ten Euro per ton of carbon dioxide. About 31 percent estimate the price even below five Euro.

This means that only few experts really expect a heavy cost burden for the enterprises right at the onset of the European emissions trading scheme. This applies even more so when considering that enterprises in Germany - similar to most European countries - have been assigned approximately 98 percent of their average emissions between 2000 and 2002 free of charge.

At the beginning of the potential first commitment period of the Kyoto-Protocol (2008) the price expectations are higher: Only 47 percent of the experts expect a price below 10 Euro, some 37 percent see the price between 10 and 20 Euro, and 16 percent even expect a price higher than 20 Euro per ton of CO2. For the time after 2012 about 48 percent of the experts anticipate stricter, while 40 percent expect unchanging reduction requirements for Germany as compared to the Kyoto-Protocol. For the whole of the EU-25 stricter targets are expected by 53 percent and more or less unchanged targets by 30 percent of the energy market experts.

The price level is determined by the real scarceness of emission rights in the sectors of the European economy which are subject to the emissions trading regime. However, the scarceness is greatly influenced by the allocation within the National Allocation Plans all over Europe. In Germany the sectors of the economy which are eligible to emissions trading were assigned emission reductions of 0.4 percent. Reduction targets in other European states - with the exception of Great Britain - have allocated more emission rights to their enterprises than they needed between 2000 and 2002.

The final decision on the National Allocation Plan in Germany caused a tough debate between the Ministry of the Environment, the Ministry of Economy and the industrial associations. Despite the tough and at times emotional debate in the media the expert opinion remained unchanged: before as well as after the public debate about 71 percent of the survey participants were in favour of the emissions trading in Germany.

Information on the survey

The ZEW-Energy Market Barometer is a six-monthly survey among approximately 200 experts from science and practice (energy supply companies, energy business and energy service companies). The experts are asked for their short- and medium-range expectations concerning the development of national and international energy markets (short-range expectations: six months, medium-range expectations: five years). The latest survey which is the basis of this press release was done in May and June 2004.

Contact

Dr. Ulf Moslener, E-mail: moslener@zew.de