Carbon prices are up due to nuke disaster in Japan
Japan’s devastating tsunami and its subsequent nuclear emergency has sent carbon prices to their highest level in two years, in response to higher natural gas prices and Germany’s decision to close nuclear reactors for testing.
The price of the benchmark EU allowance [EUA] contract hit €17.49 today, up 10.9% from its €15.77 close on Thursday, the day before the earthquake hit Japan.
It closed at €17.32, up 4.3% on the day.
Carbon permits under the EU’s emissions trading scheme, which Switzerland is set to join, rose 5.5 percent to close at €16.60 a tonne on the ICE Futures Europe exchange in London.
The Plans to extend the operating life of the Germany’s nuclear plants would be suspended for at least three months, pending an inquiry into their safety. German government has decided to halt its seven oldest nuclear reactors- increasing demand for replacement power from fossil fuels.
Angela Merkel, German Chancellor, decided to suspend the plants for safety checks following concerns about meltdown of nuclear power in Japan, which could remove about 5 Gigawatts of capacity from the power market.
A German government decision to cancel nuclear extensions would result in an additional demand for 700 million tonnes of carbon through 2020. Nuclear energy accounts for roughly 30 percent of Europe’s energy mix, rising to as high as 80 percent in France.
Nathalie Kosciusko- Morizet, French environmental minister said,
Events in Japan were unlikely to change her country’s reliance on nuclear energy – we can’t switch renewable over night! We need nuclear energy for the future; the dependence on it has risen to as high as 80 percent.
Spanish and Italian ministers made similar pronouncements, while separately, EU energy commissioner “Gunther Oettinger” said events in Japan were likely to force a fundamental rethink of energy policy across the globe.
Meanwhile Switzerland has halted plans to build new reactors and the halted approvals for three nuclear plants are ahead for a safety review.
The US, Senator Joe Lieberman said,
US should “put the brakes on” new nuclear power stations, until the consequences from Japan become clearer.
Japanese carbon emissions are set to rise in the wake of last week’s catastrophe, which caused severe damage to nuclear facilities, and will put the country further away from its emissions reduction target under the Kyoto Protocol.
A Deutsche Bank analyst said,
“We think Japan is more likely to make up any further shortfall in its Kyoto requirements arising out of this disaster with purchases of AAUs.
Based on 9.7GW of nuclear capacity being taken out of Japan’s energy mix for a year, the country’s carbon emissions may raise to 70Mt if that capacity remains offline until the end of next year.
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