Isra-Mart srl : BarCap ups 2013 U.N. carbon price forecast by 10 percent

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Isra-Mart srl news:
Barclays Capital raised its price forecast for U.N.-backed carbon credits by 10 percent to 24 euros ($34.70) a tonne on widening spreads, analysts said in a research note on Tuesday.

The bank increased its price estimate for 2013 permits called certified emissions reductions (CERs) to 24 euros a tonne from 22 euros, the bank said in a research note.

Under the U.N.'s clean development mechanism (CDM), firms can invest in carbon-cutting projects in developing nations and receive CERs in return, which can be used against their own emissions.

The premium for CER contracts for delivery in 2013 over those for delivery in 2012 has widened to 1.22 euros from 0.88 euros over the past month.

This is due to restrictions on the use of some industrial gas CERs in the EU's emissions trading scheme from 2013, which limits the option value of those credits before 2013, the bank said.

"As those options near expiry (when they will be no longer eligible), the lower the relative value they will be able to command, the wider both the CER time spreads and the EUA-CER spread will become," said Trevor Sikorski.

The 2012-2013 CER spread could widen to 4 euros by 2013.

Sikorski forecasts a total 940 million CERs will be issued over the period 2008 to 2012. Improved U.N. processes for dealing with requests for issuance mean this number could be higher, but demand would have to meet the greater supply.