Having just returned from London where I spoke at the Climate Finance 2011 conference on the developments in North America, particularly the approval by the California cap and trade program, a rather glum audience listened to speakers discuss the oversupply of carbon offsets in the market going forward over the next several years.
The long market was specifically discussed by Trevor Sikorski, Head of Environmental Market Research, Barclays Capital. He presented a market of low prices for the present and next few years as a result of lower emissions becasue of a week economy and oversupply of allowances and offse
Point Carbon reported that UBS analysts predict carbon prices could go as low as 3 euros as the EU faces a predicted weak economy and the market remains oversupplied with permits until 2025.
As the EU considers lowering the carbon cap from 20 percent to 30 percent, it may be able to reach such a cap at low prices with offsets in such significant supply.