Europe's industrial slump

How bad will it get, and what does it mean for carbon?

The outlook for industrial activity in Europe is important to carbon market investors, in part as it signals potential demand for emission allowances. Recall, that industry accounts for around half of EU ETS covered carbon emissions.

It’s also vital to understand how it may influence the behaviour of industrial emitters. For example, one way industry may look to alleviate short term credit constraints is by selling off some of the free carbon allowances they have been allocated.

Lets first look at the latest trends in Eurozone manufacturing activity, before considering how the energy crisis industrial recession compares with previous slumps.