In spite of its historical low price, the CER forward curve shows an implied premium of December 2013 futures compared to December 2012 over the last year. Meanwhile the implied premium of the EUA exhibits a slowly diminishing pattern. Under the expectation theory assumption this signifies that the market should provide an upward trend in the long term, but with more momentum for the CERs.
Durban will not bring more support to markets as it failed to reinforce or extend the Kyoto protocol under its actual form. Hence the carbon price will stay on a very low level under 10 € until 2012.
The carbon market will probably be reshaped for the next few years with significant consolidations of the major actors and with significant reduction in trading profits. The only positive impacts could be brought by public financial institutions (WB, EIB, etc.) but not very soon given the fact that the debt issues will command their attention for the next year.
For the next quarter the price will definitely be bearish. We might see some support around 6 euros if the EC tries to implement a salvation plan for the ETS. Otherwise the markets have all the chances to be suspended in the next month given the fact that a cap-and-trade market with a price around 6 -7 euros does not bring any efficiency in the emissions reduction framework, compared to simple tax.
In the most optimistic scenario under a lot of conditional probabilities the EUA will look over the next semester in the same direction as the equity markets with a probable comeback in positive territory through the second quarter of 2012. The CER will be in the same position but the upward trend might be more accentuated for the next semester.