The European Parliament approved a watered-down version of a stopgap measure to bolster prices in the EU’s carbon market to amid oversupply. The EU proposal to delay sales of 900 mln. carbon permits to reduce a record glut needs support from both the Parliament and national governments to be implemented.
We expect EU carbon allownace prices to increse of about 1-2 EUR which should have a mild one-off positive impact on German baseload electricity prices (carbon price grow times 0.8) as well as on shares of low carbon intensive generators such as nuclear, wind and hydro, as Fortum, Verbund, CEZ, E.ON, GDF Suez. Nevertheless, as auction curbs are still far from certain and unlikely to start before mid-2014, we do not expect any sustainable growth of mentioned shares. Please note, that falling thermal coal prices still remain an adverse issue for German power prices and regional power producers. /