Soaring energy supplies coupled with subdued demand means that a further slump in EU carbon permits is on the cards, according to a report by Bloomberg citing veteran hedge fund manager Per Lekander, CEO of Clean Energy Transition.
The report quotes Lekander as saying in a telephone interview that the price of carbon permits is “going way lower”.
“The fundamental demand of carbon in the near term is going to be extremely weak,” he said.
Prices have already dropped by 30% so far this year with increases in supplies of renewable power, falling gas prices and a recovery in nuclear and hydro plants combining to curb pollution — a key driver of demand for emission permits in Europe.
European industrial companies purchase carbon permits to account for each ton of emissions they release into the atmosphere. An acceleration in the development of solar energy plants — sparked by Europe’s recent energy crisis — has seen prices plummet from previously soaring levels.
Combined with an increase in the supply of permits available at auction, Lekander is predicting carbon could slump as low as €35. On Wednesday, benchmark carbon futures for December fell to €55.41 a ton, the lowest level seen since March 2022.
