European carbon prices forecast to rise 28 percent

Carbon pollution credit prices in the European Union will likely rise 28 percent by December to 7.50 euros ($10.21) per metric ton, Bloomberg News estimated Friday.

{mosads}Prices have already grown 18 percent in the first six months of the year, Bloomberg reported. Its forecast was based on the median of 11 estimates Bloomberg gathered, ranging from an 11 percent prediction to 71 percent.

The forecast comes as European regulators are debating whether to reserve 60 percent of the 2.1 billion extra tons of permits available in the $54 billion market in an attempt to increase prices. The tradeable credits allow holders to emit carbon dioxide pollution, and the excess permits currently available could serve Europe’s entire needs for a year.

Analysts believe it’s extremely important for regulators to find the right amount of permits to reserve, Bloomberg said.

“They’ve shot an arrow in the right direction,” Henry Derwent, chief executive officer at Climate Strategies in London, told Bloomberg. He added that regulators should use more modeling and simulation to determine the right level.