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Volatile prices predicted in the emissions market

Carbon prices will become more volatile said a report by global business consultants GlobalData last week. Future of Emissions Trade said increased volatility will come as a result of the greater difficulty in forecasting carbon markets. A large number of variable factors, from global economic growth, fossil fuel prices and international and national climate agreements mean models forecasting carbon prices have a wide range of results.

The report also noted the European sovereign debt crisis had drastically reduced carbon demand, hence its price in the trading market also suffered a steep decline. The failure of the international community to agree on a common goal in a post-2012 Kyoto framework has also damaged the confidence of the private sector, and played a key role in lowering the carbon price.

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