From CarbonPositive:
The EU carbon market has nosedived as the trade in emissions permits and offsets catches the contagion that has spread across global financial markets in recent days.
The prices of EUAs and CERs have fallen sharply as fears of a worldwide economic slump take hold. The pivotal US economy now appears on the brink of recession as the fallout from the sub-prime mortgage lending collapse shakes confidence among market professionals and private investors.
The carbon market began to follow share and finance markets down last week (Jan 14-18), but modest falls had turned into a rout by this week. By the close of a very volatile day on Tuesday January 22, the price of the benchmark Dec 08 EUA contract had fallen 13 per cent on the European Climate Exchange since the start of the previous week.
Dec 08s closed at €20.31 having recovered some heavy falls earlier in the day, but was down €3.10 over the week. Longer dated futures and forward contracts suffered similar falls, Dec 09s closing at €20.78, Dec 10s at €21.32 and Dec 12s at €22.88....MORE
