Emissions Trading / Carbon Market News (23/05/2022)

Dear Madam or Sir,

Last week the Environment Committee (ENVI) of the EU Parliament met as part of the “Fit for 55” climate package. The ENVI had the reform proposals of the European Commission with regard to the EU Emissions Trading (EU ETS) and in some cases tightened them up.

Important key points are now that the affected sectors of the EU ETS reduce their emissions by 67% by the end of the decade. In addition, the European Commission was asked to draw up a proposal that would include all economic sectors in CO2 pricing by 2030. In addition, the linear reduction factor for CO2 emission allowances is to be raised from the current 2.4% to 4.2% per year and increased by an additional 0.1% per year.

Regarding the free allocation of emission rights for energy-intensive industries, it was proposed to reduce them to 90% in 2025, 80% in 2026, 70% in 2027, 50% in 2028, 25% in 2029 and 0% in 2030.

However, the new emissions trading system for the transport and building sectors in particular was controversial and the final compromise proposal is that private vehicle refueling and heating of private residential properties with fossil fuels should only be included from 2029 and prices should be capped at 50 euros.

Furthermore, shipping is to be included in the EU ETS as early as 2024 and waste incineration from 2026.

As seen by the 9% fall in EU emissions allowances over the past trading week, the announcement that the EU is selling more than 200 million Market Stability Reserve (MSR) allowances to raise funds for its Energy Transition Initiative and the to accelerate the move away from Russian energy sources.

Now the whole package will go into the trilogy negotiations in the coming month, where cutbacks will probably have to be accepted at the end of every point. But the bottom line will be a significant strengthening of the ETS and prices could rise above the 100 euro mark. The additional auction of certificates from the MSR is also correct, because the money is urgently needed. In return, the annual reduction factor is likely to increase to 3-4% and the free allocations will be phased out.

  (Average Quotes Exchange / OTC)   
Instrument13/05/2220/05/22Change
EUA (Spot-Market)88.36 EUR80.24 EUR-8.12 EUR
EUA (December-2022-Future)88.48 EUR80.39 EUR-8.09 EUR
VCU (Voluntary Carbon Units ø)10.43 USD10.53 USD+0.10 USD
VER (Gold Standard Spotmarkt ø)4.92 USD4.73 USD-0.19 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)111.50 USD112.87 USD+1.37 USD
EURO (Currency, Forex)1.0413 USD1.0562 USD+0.0149 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 (16/05/2022)

Dear Madam or Sir,

In the past trading week, the price of EUA continued to orientate itself towards the 90-euro mark, whereby this represented a persistent resistance. However, we saw a brief but strong exception to the solid sideways movement on Wednesday, when the market plummeted to just under 82 euros within a few minutes.

The reason for this sharp drop was statements from Brussels that EU lawmakers want to take action against speculative traders participating in the EU Emissions Trading Scheme. In recent months, there have been repeated complaints from MEPs as well as from some member states (which are unfortunately still too dependent on coal-fired power generation). These claimed that unnamed speculators had driven up the price of EUAs too high and that this was costing the industry too much money.

In fact, tomorrow, the Environment Committee will vote on a comprehensive reform of the European Emissions Trading Scheme, whereby shipping, road transport and the heating sector as well as SMEs are to be included in the ETS in the future. As part of this announcement, it was said that financial investors would be excluded from the market from 2025. The actual compromise proposal states that from January 2025, only polluters participating in the system and their financial intermediaries will be allowed to hold accounts in the EU registry. However, an assessment on this is first to be made by the EU Commission by July next year. Due to this clarification, the price quickly got back on track and even briefly broke through the 90-euro mark.

A complete exclusion of speculative traders from carbon trading would indeed be a dramatic break. After all, it was the express will of the Kyoto Protocol that private investors should also participate in carbon trading. In addition, the Market Stability Reserve (MSR) was established to cushion overly strong price fluctuations. A tightening of the MSR as well as a limitation of positions by big investors might be more suitable means to curb the criticised excesses in the sense of the ETS as well as the free market economy. As the European Commission announced late on Thursday, almost 348 million carbon credits will be taken out of the EU ETS by next summer and transferred to the MSR. This does not suggest that legislators are fundamentally interested in a lower CO2 price.

  (Average Quotes Exchange / OTC)   
Instrument06/05/2213/05/22Change
EUA (Spot-Market)91.36 EUR88.36 EUR-3.00 EUR
EUA (December-2022-Future)91.54 EUR88.48 EUR-3.06 EUR
VCU (Voluntary Carbon Units ø)10.74 USD10.43 USD-0.31 USD
VER (Gold Standard Spotmarkt ø)5.64 USD4.92 USD-0.72 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)112.81 USD111.50 USD-1.31 USD
EURO (Currency, Forex)1.0534 USD1.0413 USD-0.0121 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 (09/05/2022)

Dear Madam or Sir,

Yesterday the G7 countries agreed to stop importing Russian oil. The oil embargo is intended to deprive Russia of an important source of income for financing the war against Ukraine. The G7 includes the USA, Great Britain, France, Canada, Italy, Japan and Germany, which has held the presidency since the beginning of the year.

The European Union is also planning an oil embargo, but has yet to come to an agreement with the member states, which are currently strong dependent on imports of Russian oil. As of August 10, the EU has already placed an embargo on coal imports from Russia.

However, coal is also an important reason why the prices for EU emission allowances have recently broken through the 90 euro mark again and are showing a plus of 8.4% week-on-week.

Due to the high oil and gas prices and the planned phase-out of Russian fossil fuel imports, a greater use of coal for energy production is expected, especially since Germany intends to stick to its nuclear phase-out at the end of the year. Since coal has the worst climate balance in energy production, the energy producers will emit correspondingly more CO2 and therefore have a higher need for emission rights.

Coal produces 0.36 kg of CO2 per kWh of electricity, while natural gas produces 0.22 kg. Accordingly, producers have to buy 64% more allowances than if they used gas to generate electricity.

One can only hope that this will drive the further expansion of renewable energies in the EU, since Germany alone will produce a further 1,989 million tons of CO2 in the 2038 phase-out scenario from coal-fired power generation.

  (Average Quotes Exchange / OTC)   
Instrument29/04/2206/05/22Change
EUA (Spot-Market)84.87 EUR91.36 EUR+6.49 EUR
EUA (December-2022-Future)84.45 EUR91.54 EUR+7.09 EUR
VCU (Voluntary Carbon Units ø)10.63 USD10.74 USD+0.11 USD
VER (Gold Standard Spotmarkt ø)5.63 USD5.64 USD+0.01 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)106.55 USD112.81 USD+6.26 USD
EURO (Currency, Forex)1.0545 USD1.0534 USD-0.0011 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 (02/05/222)

Dear Madam or Sir,

Last Friday, the 69th Federal Press Ball took place in Berlin. However, many prominent politicians, above all German President Frank-Walter Steinmeier and the members of the cabinet, had cancelled because of the war. It was not only for this reason that the speech by Ukrainian Ambassador Andrij Melnyk, known for his clear words, attracted much attention. Among other things, the ambassador warned the numerous representatives of the press not to slacken their attention as the war continues. It is not uncommon for topics to disappear from the focus of journalists and thus from the public eye over time.

Unfortunately, this also applies to other crises and conflicts, not least the climate crisis, which poses an existential threat to all countries in the world. For example, one of the worst weather disasters in South Africa, with well over 400 deaths and probably 40,000 people displaced by the floods, received only brief attention. Another example is currently taking place in South Asia. In India, millions of inhabitants are currently suffering from an early heat wave with temperatures sometimes exceeding 45 degrees Celsius. Northwest and central India are experiencing the hottest April since weather records began 122 years ago, the head of the weather service said. At more than two dozen places, the agency reported maximum temperatures of more than 45 degrees on Friday, with Banda in the northern state of Pradesh the hottest place in the country at 47.4 degrees. And the heat wave could intensify in the coming days, with temperatures crossing the 50-degree Celsius mark in the north, as May is usually the hottest month of the year.

It would be a fatal mistake to pay attention to such disasters only when they happen right on our doorstep or when we ourselves are affected by them. Because in fact we are all affected by them. The next environmental disaster can happen at any time and anywhere. We should therefore not ignore it, but make it the basis of our actions and decisions.

The market for European pollution rights fell quite significantly in the past trading week. On Wednesday, it even briefly broke through the 80-euro mark. The price then stabilised slightly above this level before moving up again on Friday in thin trading, narrowly missing the target of 86 euros.

  (Average Quotes Exchange / OTC)   
Instrument22/04/2229/04/22Change
EUA (Spot-Market)89.59 EUR84.87 EUR-4.72 EUR
EUA (December-2022-Future)88.99 EUR84.45 EUR-4.54 EUR
VCU (Voluntary Carbon Units ø)10.91 USD10.63 USD-0.28 USD
VER (Gold Standard Spotmarkt ø)5.91 USD5.63 USD-0.28 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)105.91 USD106.55 USD+0.64 USD
EURO (Currency, Forex)1.0799 USD1.0545 USD-0.0254 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

Carbon Market News (25/04/2022)

Dear Madam or Sir,

The submission deadline for the compliance year 2021 in the mandatory European emissions trading system EU ETS ends at the end of this week.

As was often the case in previous years, there was a small rally, which was triggered last Wednesday by the news that the Energy Committee of the European Parliament largely supports the EU Commission’s proposal for a reform of EU emissions trading in order to achieve the agreed reduction in greenhouse gases 55% to implement 2030. The main negotiations on the reform should begin in June at the latest.

Added to this were last-minute buyers who had probably been waiting for even cheaper prices and the breakthrough of the 80-euro mark, which then resulted in a price increase of more than 9%.

On a weekly closing basis, the spot market closed even higher than the December-22-Future due to the deadline, posting a weekly gain of more than 12%.

After only 6,957,000 EUA were auctioned last week, there are almost twice as many emission certificates in the new trading week with 12,786,000 on all five trading days.

Due to the pending end of the submission period this Friday and the closing price of just under the 90-euro-mark, the price should not offer any particularly favourable buying opportunities, at least in the coming days, despite the higher auction volume.

In the next week, developments in the war in Ukraine should again be one of the dominant topics on the market.

  (Average Quotes Exchange / OTC)   
Instrument15/04/2222/04/22Change
EUA (Spot-Market)79.88 EUR89.59 EUR+9.71 EUR
EUA (December-2022-Future)79.97 EUR88.99 EUR+9.02 EUR
VCU (Voluntary Carbon Units ø)11.53 USD10.91 USD-0.62 USD
VER (Gold Standard Spotmarkt ø)6.06 USD5.91 USD-0.15 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)111.41 USD105.91 USD-5.50 USD
EURO (Currency, Forex)1.0810 USD1.0799 USD-0.0011 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