ANNUAL GHG MARKET SENTIMENT SURVEY
An overwhelming majority of respondents to IETA’s annual market sentiment survey expect an expansion of carbon markets, driven by the Paris Agreement.
Over 80% of respondents to this year’s survey, conducted by PwC, said they expect existing carbon markets to expand as a result of the Paris Agreement – compared with 58% last year. This will be driven by developments at both the national and sub-national level, the survey found.
By 2025, new emissions trading systems (ETSs) are seen starting up in Canada, Australia, Brazil, Chile, Japan, Mexico, South Africa and Turkey, said respondents. This is in addition to the national ETS in China that is expected to begin next year, as well as the Ontario market, the legislation for which was passed in mid-May.
The carbon price respondents feel is needed to achieve the Paris Agreement’s objective to limit warming to well below 2°C jumped by a third this year, to €40. This is in stark contrast to their expectations for prices in major carbon markets from now until 2020, ranging from €6 to €15.
Respondents to IETA’s annual market sentiment survey expect European carbon prices to rise for the first time in four years.
This years survey, conducted again by PwC, found that respondents expect the average Phase III EUA price to be €10.79 – up from €8 last year, and the first rise since 2011. Prices between 2020 and 2030 are expected to average €18.40, according to the survey of IETA’s members.
This 10th edition of IETA’s annual market sentiment survey found that respondents see a lower carbon price needed to drive low-carbon investment than five years ago, averaging €29.60 now compared with two-thirds saying a price of €40 or more is needed in 2010.
However, unsurprisingly, an overwhelming number of respondents (88%) see carbon markets as an effective policy instrument – with 58% saying markets are the most effective driver of low-carbon investment, up from 36% in 2010.
The Paris climate talks will lead to an expansion of global carbon markets, according to 58% of respondents – with strong growth seen in Asia and North America in particular. Notably, all respondents expect China to have a national ETS, with 64% expecting the market to be implemented by 2020.
An overwhelming majority of IETA members expect carbon markets to have a role in an international climate change deal, expected to be agreed in Paris next year, according to IETA’s ninth annual Market Sentiment Survey.
Over 80% of respondents to this year’s survey, conducted by PwC, expect the Paris 2015 climate agreement to pave the way for more carbon markets globally, with the potential to link them in the future. Around two-thirds of respondents (63%) believe that the Clean Development Mechanism (CDM) will continue on in some form, with most of those replying think it is likely to be reformed.
However, only a handful (4%) anticipate all major economies to face legally-binding reduction commitments from the deal.
IETA's 6th GHG Market Sentiment Survey highlights: