By Mathew Carr - Sep 21, 2012 8:16 PM GMT
European utilities are poised to add more coal-fired power capacity than natural gas in the next four years, boosting emissions just as the era of free carbon permits ends.
Power producers from EON AG to RWE AG (RWE) will open six times more coal-burning plants than gas-fed units by 2015, UBS AG said in a Sept. 5 research note. Profits at coal-fired power stations may more than double by then, according to a Goldman Sachs Group Inc. report published on Sept. 13th.
The new stations, replacing atomic and aging fossil fuel- based plants, will boost demand for emission permits because coal-fired generators need twice as many credits as gas users under climate protection rules. The price of UN credits may rebound 73 percent by the end of next year from an all-time low on Sept. 18, according to the Euro Carbon Macro Fund in Luxembourg, which manages about $32 million.
“The economics for coal are near the best we’ve seen in five years,” Laurent Segalen, a director at ECMF, said yesterday in an interview from London. Buying UN credits for 2013, after they plunged almost 80 percent in the past year, is “an amazing bargain,” he said.