Pricing Emissions in the Green Energy markets has become a key topic of debate. With the advent of the Verified Carbon Offset Standard and the NYSE Blue and ACX, the market has begun factoring in the potential for a regulated style of pricing system. This however has not eventuated. Extensive rhetoric over energy usage and the effect GHG is having on nature and the environment has led to a defined carbon credit program. As a market Carbon Credits are still relatively new, with organisations and exchanges relying on demand and supply for pricing valuations. The idea that an OTC product could turn into a developed program is leading to a boost in interest.
To truly define, how the pricing and valuation structure currently works, we need to look at the individual allowance limit predetermined by the EU. The specified European Union Allowance (EUA), may have a separate pricing level from the basic Carbon Emissions OTC product. To put this into context, a company that offers an offset project to an individual or corporation could lead to
Leading industry analysts and educators have highlighted the cause and effect of structured valuation and pricing of carbon credits. The key purpose is to change the behaviour of the individual or the corporation from a greenhouse gas point of view. Pricing control is a key problem that the industry is tackling. With many projects stipulating a set value by which carbon emissions can be offered on a tonnage basis, the supply and demand equation is thrown out of the window.? Firstly by increasing the price of carbon, consumers will identify the value of the credit from an emissions point of view. However the uneducated sector of the market could deny the cost attributed to the project. Education is still a determinant of the value.
The social responsibility aspect of the ?carbon footprint,? has boosted the demand for Carbon Credits and has in turn spurred a new wave of valuation. Project owners no longer are required to sell credits at a deep discount, with many projects implementing a market style system of trade. Taxation however is another key aspect that could increase the valuation of projects with many governments around the world proposing a slight rise on a per tonnage basis. The possibility of a 0.10 price hike would have little impact on the demand on a long term basis. It is however important for the global regulators to decide on a mean or optimal price for carbon. The proposed $30 per tonne would keep in line with inflationary forecasts.
Tags: Emissions, Green, Market, Pricing ?
Source: http://news-society.co.cc/pricing-emissions-in-the-green-market-2/
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