Carbon credit prices fall in Europe
New Delhi: Carbon credits prices plummeted in Europe during last week by more than 50 per cent (from about € 30 per CER to about € 13 per CER) mainly because several European countries have reported better environmental compliance by bringing down their green house gas (GHG) emissions during 2005.

The demand for carbon credits depends on the actual levels of GHG emissions of various countries vis-à-vis their targeted emission reductions. If the countries achieve higher level of emission reductions than their targets, then the companies in those countries need not buy additional carbon credits. But, if they emit higher level of GHG, then they have to buy additional carbon credits - in their own country and in developing countries - to meet their emission reduction targets.

Last week prices in the European carbon exchange market stood at € 30.60 levels for December 06 after which carbon dioxide emission reports came from the Netherlands, Czech Republic, France and Walloon region of Belgium. In the reports all the countries stated that their emissions in 2005 were at lower levels than what they were allowed after which carbon prices fell with the Dec `06 contract closing at € 13.60 on Friday.

Spain was the one exception and reported higher levels of emission. By May 15, major European countries such as Britain, Germany, Italy, Poland and Portugal would be reporting their actual levels of emission during 2005.

Environmental analysts point out that greater awareness of emission norms and the heavy cost involved for non-compliance, the demand for carbon credits to offset higher GHG emissions may be dampened and may not yield high returns.

In India Gujarat Fluorochemicals, SRF, DCM Shriram, Reliance Industries, Birla Corporation, Tata Sponge Iron, ACC, Gujarat Ambuja and JSW Steel have accumulated or are in the process of accumulating credits.
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