2020 Survey

Carbon market participants expect the COVID-19 pandemic to weigh on emissions allowance prices for the next two years, with price expectations for the coming decade also dropping, according to the 15th edition of IETA’s annual GHG Market Sentiment Survey.

The survey, conducted by PwC, reveals that respondents expect EU ETS prices to average €31.71/tCO2 in Phase 4 (2021-30), a reduction of 12% from last year’s €36.05/t prediction.

The poll of 137 IETA member companies and 22 airlines also showed diminished expectations for all the major emissions markets over the coming decade. Respondents expect prices in the Western Climate Initiative, which groups California and Quebec, to be 12% lower over the coming 10 years, while prices in the US Regional Greenhouse Gas Initiative will be 27% lower.

Prices in Mexico and New Zealand could see the largest drop compared to 2019 expectations, with NZ ETS allowance prices expected to be 35% lower, and Mexican prices 38% lower, than respondents forecasted last year. 

This year’s survey also investigated the growth of Natural Climate Solutions (NCS) over the last 12 months, and the prospects for NCS to contribute to achieving the goals of the Paris Agreement. Around one-fifth of survey respondents felt that the biggest challenge to wide-scale investment in NCS is the lack of compliance systems that recognise the benefits of carbon storage in natural sinks, while the same number also expressed concerns over the permanence of such removals.