Emissions Trading / Carbon Market News (08/08/2022)

Dear Madam or Sir,

Quite a few who are currently on summer vacation on the German North Sea and Baltic Sea are happy about a lot of sun and rather atypical weather for local conditions. Others, such as farmers and foresters or inland waterway skippers on the Rhine River, are more concerned about the ongoing drought.

It is already clear that the summer of 2022 will continue the drought trend not only in southern Europe but also in Germany and even has the potential to overshadow the drought summer of 2018.

But not only in Europe it is hot, also in Siberia there were recently temperatures above 35°C in and around Yakutsk. This may not seem worrying at first, but there is the so-called permafrost soil, which naturally thaws at such temperatures. Gigantic amounts of dead plants are preserved in these soils. As these thaws, bacteria start the process of decomposing the organic remains, releasing vast amounts of CO2 and methane gas into the atmosphere, further accelerating climate change and in turn increasing the frequency of heat waves.

The fight against climate change requires the cooperation of large emitters, such as China and the USA. Even if the USA got its own climate-social package with a narrow majority of 51:50 votes through the Senate, the law still must go through the House of Representatives, where the Democrats have a larger majority. However, Nancy Pelosi’s trip to Taiwan not only snubbed China, but also led to the collapse of the US-China climate talks, which should not be underestimated in the global fight against greenhouse gas emissions.

In the past week, the prices for European CO2 emission certificates have risen by almost 8%, partly since the auction volume was halved in August and the efforts of EU ministers to reduce gas consumption by 15% by March 2023. Since this only works with the increased use of coal, despite the expansion of renewable energies, greater demand for EUAs from the energy supply companies is assumed, which is driving up prices. However, the significantly lower oil price was no reason to halt the rise.

  (Average Quotes Exchange / OTC)   
Instrument29/07/2205/08/22Change
EUA (Spot-Market)78.36 EUR84.49 EUR+6.13 EUR
EUA (December-2022-Future)78.55 EUR84.76 EUR+6.21 EUR
VCU (Voluntary Carbon Units ø)7.40 USD7.58 USD+0.18 USD
VER (Gold Standard Spotmarkt ø)2.98 USD3.43 USD+0.45 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)103.70 USD94.42 USD-9.28 USD
EURO (Currency, Forex)1.0227 USD1.0180 USD+0.0047 USD

(The average exchange quotes and OTC-prices shows the average between bids and ask of several exchanges and OTC markets for carbon emission rights in the ETS. Bid and ask has usually in Spot Market a visible spread. The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. Crude Oil and Euro Currency shows day-end-exchange quotes. This market information has just an informational character and are no advice or offer to trade carbon emission rights or their futures and options. If you want to unsubscribe, please reply to this mail.)

Please call our international carbon desk if any further questions exist: +49.2831.1348220.

With kind regards,

ADVANTAG Services GmbH

Emissions Trading / Carbon Market News (01/08/2022)

Dear Madam or Sir,

While in Europe, due to the seemingly endless war in Ukraine, environmental and energy policy balancing acts have to be mastered, the possibly most spectacular news in favour of climate policy reaches us from the USA.

US Senators Joe Manchin and Chuck Schumer have introduced a long-awaited bill to combat climate change and promote clean energy programmes. The bill has 725 pages and is called the “Inflation Reduction Act of 2022”. While the title points to reducing inflation as the goal of the bill, it would nevertheless be the largest and most aggressive investment Congress has ever made for climate action, with a planned $369 billion, and includes provisions to reduce US emissions by about 40% by 2030.

Lawmakers, climate change advocates and environmentalists, who had attacked Senator Manchin for his previous opposition to climate action, were thrilled by the surprise announcement. In fact, it would be a big win for the clean energy transition – providing financial incentives and tax credits for everything from manufacturing clean energy products and buying clean vehicles as well as promoting clean sources of electricity. President Joe Biden said the tax credits and investments in clean energy projects will create thousands of new jobs and help lower energy costs. That is why he urged the Senate to pass the bill as soon as possible. The Senate will vote on the climate change bill next week. Afterwards, it will be passed on to the Democrat-dominated State House.

Prices for European emission allowances have recovered a little from the previous week’s decline and found their way back to the 80-euro mark, especially on Thursday and Friday. Analysts continue to expect at least moderately higher prices, as the increased burning of coal as well as EU market reforms will offset the effects of the recent agreement on reducing the use of gas and because emissions from the power sector will also rise above the 2021 level. This fits with the news from several European utilities, which confirmed in their half-year results an increase in their fossil power generation covered by the EU ETS. Among other reasons, they cited declining hydropower production due to drought-like conditions on the Iberian Peninsula.

  (Average Quotes Exchange / OTC)   
Instrument22/07/2229/07/22Change
EUA (Spot-Market)76.36 EUR78.36 EUR+2.00 EUR
EUA (December-2022-Future)76.60 EUR78.55 EUR+1.95 EUR
VCU (Voluntary Carbon Units ø)8.07 USD7.40 USD-0.67 USD
VER (Gold Standard Spotmarkt ø)3.35 USD2.98 USD-0.37 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)103.58 USD103.70 USD+0.12 USD
EURO (Currency, Forex)1.0161 USD1.0227 USD+0.0066 USD

(The average exchange quotes and OTC-prices shows the average between bids and ask of several exchanges and OTC markets for carbon emission rights in the ETS. Bid and ask has usually in Spot Market a visible spread. The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. Crude Oil and Euro Currency shows day-end-exchange quotes. This market information has just an informational character and are no advice or offer to trade carbon emission rights or their futures and options. If you want to unsubscribe, please reply to this mail.)

Please call our international carbon desk if any further questions exist: +49.2831.1348220.

With kind regards,

ADVANTAG Services GmbH

Emissions Trading / Carbon Market News (25/07/2022)

Dear Madam or Sir,

The German Federal Ministry for the Environment published a study last week which came to the conclusion that drought, heat and heavy rain have caused damage of more than 80 billion euros in Germany alone in recent years.

Since 2000, an average of at least 6.6 billion in damage has occurred in Germany every year. In particular, the extraordinarily hot and dry summers of 2018 and 2019 and the flash floods and floods in July 2021 contributed 40 billion euros to this. Around 35 billion euros in damage was caused by the heat and drought in 2018 and 2019 alone. In addition, damage of around 5 billion euros was caused by isolated storm and hail events.

And if you look at the drought and heat waves of the summer of 2022 so far, with many days above 30°C, this year will also cause immense costs in Europe.

Uncertainty about gas supply and the European emergency plan sent prices for European carbon emission allowances plummeting in the past trading week. On a weekly close basis, they are down 10.3%, breaking through key chart technical support lines.

However, it currently looks as if the price is stabilizing in the area above EUR 76 and it would not be surprising if prices were to move back towards the EUR 80 mark in the short term.

  (Average Quotes Exchange / OTC)   
Instrument15/07/2222/07/22Change
EUA (Spot-Market)85.16 EUR76.36 EUR-8.80 EUR
EUA (December-2022-Future)85.38 EUR76.60 EUR-8.78 EUR
VCU (Voluntary Carbon Units ø)8.63 USD8.07 USD-0.56 USD
VER (Gold Standard Spotmarkt ø)3.74 USD3.35 USD-0.39 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)100.99 USD103.58 USD+2.59 USD
EURO (Currency, Forex)1.0064 USD1.0161 USD+0.0097 USD

(The average exchange quotes and OTC-prices shows the average between bids and ask of several exchanges and OTC markets for carbon emission rights in the ETS. Bid and ask has usually in Spot Market a visible spread. The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. Crude Oil and Euro Currency shows day-end-exchange quotes. This market information has just an informational character and are no advice or offer to trade carbon emission rights or their futures and options. If you want to unsubscribe, please reply to this mail.)

Please call our international carbon desk if any further questions exist: +49.2831.1348220.

With kind regards,

ADVANTAG Services GmbH

Emissions Trading / Carbon Market News (18/07/2022)

Dear Madam or Sir,

Climate change is leading to major problems in Europe this summer. In the past few weeks, southern Europe has been hit by an exceptional heat wave with temperatures around 40°C and drought, with Italy, Spain and Portugal leading the way. This led to forest fires in many places, which are difficult to contain due to the hot and dry wind and spread quickly.

Northern Italy has been in a state of emergency for weeks, as one heat wave follows the next and there is no precipitation. There is a visible lack of water in Lake Maggiore and at Lake Garda and the first regions have already restricted the consumption of drinking water, such as Milan, Venice and Verona. In the Po Valley, 30 percent of all Italian agricultural production is threatened this year and the region is experiencing its worst drought in 70 years. In addition to the Ukraine war, this is likely to have a further impact on the already high global food prices.

This week, the heat wave is also coming to Germany, with temperatures of almost 40°C, where there is already a water shortage in many regions and the risk of forest fires is increasing day by day. Great Britain meanwhile fears temperature records of around 40°C this week.

The 13th Petersberg Climate Dialogue has been taking place since yesterday and will be attended by around 40 ministers from a wide variety of countries. This year it is taking place at the German Federal Foreign Office and is being hosted by Germany and Egypt, where the World Climate Conference (COP27) will take place in autumn. It remains to be seen whether there will be significant results at a time when coal-fired power generation is supposed to secure Germany’s energy supply.

The market for European carbon emission allowances last week recouped the losses of the previous week and the EUA closed above the 85-euro mark with continued low volatility. The price gains were accompanied by a euro, which briefly traded below the US$ 1 mark at 0.9951 last Thursday, and an oil price (Brent variety), which marked a short-term low of under US$ 96, a price that was last seen in February. The euro is still under pressure on energy supply risks and oil fell sharply after the US suggested a maximum price for Russian Ural oil in a range of US$ 40 – US$ 60 per barrel.

In this trading week there is once again the full volume of a total of 11.5 million EUAs, which are auctioned at the European Energy Exchange on all five trading days. In the next week there will then be 8.8 million EUAs before the annual halving of the auction volume occurs in August and alternately 5.7 million or 4.4 million EUAs are offered for auction.

  (Average Quotes Exchange / OTC)   
Instrument08/07/2215/07/22Change
EUA (Spot-Market)82.55 EUR82.55 EUR+2.61 EUR
EUA (December-2022-Future)82.79 EUR82.79 EUR+2.59 EUR
VCU (Voluntary Carbon Units ø)8.83 USD8.83 USD-0.20 USD
VER (Gold Standard Spotmarkt ø)3.96 USD3.96 USD-0.22 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)107.05 USD107.05 USD-6.06 USD
EURO (Currency, Forex)1.0182 USD1.0182 USD-0.0118 USD

(The average exchange quotes and OTC-prices shows the average between bids and ask of several exchanges and OTC markets for carbon emission rights in the ETS. Bid and ask has usually in Spot Market a visible spread. The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. Crude Oil and Euro Currency shows day-end-exchange quotes. This market information has just an informational character and are no advice or offer to trade carbon emission rights or their futures and options. If you want to unsubscribe, please reply to this mail.)

Please call our international carbon desk if any further questions exist: +49.2831.1348220.

With kind regards,

ADVANTAG Services GmbH

Emissions Trading / Carbon Market News (11/07/2022)

Dear Madam or Sir,

The votes in the European Parliament last Wednesday regarding the classification of nuclear power plants and gas-fired power plants have now paved the way for classifying them as climate-friendly in accordance with the EU taxonomy regulation. Only 278 of the required 353 votes against were cast. It is extremely unlikely that this will now be prevented by the member states in the final vote. This classification now allows investors to invest in such technologies again. It remains to be seen to what extent this classification will negatively affect the further expansion of renewable energies in Europe.

The supply of gas is currently an urgent problem, as it is still not clear how security of supply in Germany and the other EU countries is to be guaranteed during the colder months of the year. In addition, the potential for social upheaval should not be underestimated, since low-income households in particular will hardly be able to cope with the already extremely high energy costs.

One of the reasons for the shortage of gas is the supply from Nord Stream I, which has been significantly reduced for weeks, which, according to Russian information, is due to technical problems. Since this morning, due to the installation of a turbine from Canada and further maintenance work, no gas has flowed through the pipeline for the scheduled 10 days. It remains to be seen whether, once the repairs have been completed, gas will again be supplied.

The Euro fell to a 20-year low of USD 1.0072 last Friday in the face of European problems linked to energy supply insecurity. The financial markets are also reacting bearishly, so it is no wonder that concerns about the economy are contributing to the fact that the prices for European emission certificates are also showing losses compared to the previous week, which, however, can be described as moderate in view of the negative environment.

In the coming week, auctions for a total of 8.8 million EUAs will take place at the Leipzig EEX, which is 2.7 million fewer emission allowances than in the following week.

  (Average Quotes Exchange / OTC)   
Instrument01/07/2208/07/22Change
EUA (Spot-Market)85.37 EUR82.55 EUR-2.82 EUR
EUA (December-2022-Future)85.58 EUR82.79 EUR-2.79 EUR
VCU (Voluntary Carbon Units ø)8.85 USD8.83 USD-0.02 USD
VER (Gold Standard Spotmarkt ø)4.11 USD3.96 USD-0.15 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)111.55 USD107.05 USD-4.50 USD
EURO (Currency, Forex)1.0424 USD1.0182 USD-0.0242 USD

(The average exchange quotes and OTC-prices shows the average between bids and ask of several exchanges and OTC markets for carbon emission rights in the ETS. Bid and ask has usually in Spot Market a visible spread. The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. Crude Oil and Euro Currency shows day-end-exchange quotes. This market information has just an informational character and are no advice or offer to trade carbon emission rights or their futures and options. If you want to unsubscribe, please reply to this mail.)

Please call our international carbon desk if any further questions exist: +49.2831.1348220.

With kind regards,

ADVANTAG Services GmbH