Sustainable Financial Services

Dear Madam or Sir,

Shipping traffic will be subject to compliance in the EU emissions trading from January 1st, 2024. However, this only starts with 40% of emissions next year and then rises to 100% of emissions caused by 2026, provided that ports are called in the EU or nearby.

Initially only ships with 5,000 gross registered tons or more are affected; this limit will drop to 400 gross registered tons in 2027.

Daniel Gent is energy and sustainability manager at the car transport shipping company UECC and expects the price of a ton of ship diesel to increase by around 117 euros next year and by around 293 euros in 2026, although rising prices for emission rights are quite different numbers could reach.

Shifting the costs to the clients and ultimately their customers is one possible way, but here too those ship fleet operators who succeed in advancing the decarbonization of their fleet will have a corresponding competitive advantage.

Last Wednesday, EU emissions rights prices visibly rose, but EUAs were unable to maintain the momentum until the end of the trading week. Accordingly, based on the weekly closing price, they only closed with a moderate gain of less than one percent.

In the new trading week, 11,524,500 EUA and 775,500 EUAA for the aviation industry will be auctioned on the EEX. However, these can now also be used for stationary systems to fulfil their compliance obligations.

This Thursday will be the last time that national German emissions certificates for 2022 will be auctioned off. Even if these have the same price of EUR 30.00 as for 2023, one should take part in the fixed-price auction on that day at the latest to ensure that you can meet your submission obligation for 2022 on September 29, 2023 and the transfer deadlines taken into account.

If you have any questions, your contact person at Advantag will be happy to assist you.

(Average Quotes Exchange / OTC)
Instrument	08/09/23	15/09/23	Change
EUA (Spot-Market)	80.71 EUR	81.53 EUR	+0.82 EUR
EUA (December-2023-Future)	81.52 EUR	82.31 EUR	+0.79 EUR
VER (Natural Carbon Offsets)	1.70 USD	1.77 USD	+0.07 USD
VER (CORSIA eligible Carbon Offsets)	0.87 USD	0.71 USD	-0.16 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	90.41 USD	94.16 USD	+3.75 USD
EURO (Currency, Forex)	1.0701 USD	1.0658 USD	-0.0043 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

Dear Madam or Sir,

Last week, the first African climate summit took place in the Kenyan capital Nairobi in preparation for the UN climate summit taking place in Dubai at the end of November.

However, the continent, which is already particularly hard hit by the effects of climate change, also has great potential to curb global warming. Africa has large amounts of raw materials that are necessary for global decarbonization. In addition, the continent opens up a high potential for investors in renewable energies, if the participants have their way.

The African Development Bank estimates the annual costs of extreme weather events caused by human-caused climate change to be between $7 and $15 billion annually, with high potential for increases in the coming years.

In 2020, industrialized countries committed to raising 100 billion annually to finance climate protection projects in the global south. So far, however, these funds have only flowed to a significantly lesser extent due to the global crises that have taken place since then.

European emissions trading also showed a clearly bearish trend last week and lost more than four percent based on the weekly closing price. And this despite the fact that only 8,218,000 EUAs were auctioned over three days in the last trading week due to a meeting of the EEX working committee and the oil price (Brent) rose above the $90 mark. This week, a total of 14,601,000 emission allowances will be auctioned on all five trading days.

In addition, more moderate temperatures are expected in Central Europe in the coming week. If there is no technical counter-reaction, the EUAs will only find technical support around 77 euros. On the upside, resistance can be found in the area around 83 euros as well as the 200-day line, which is currently at 87.18 euros for the EUA-December-future.

(Average Quotes Exchange / OTC)
Instrument	01/09/23	08/09/23	Change
EUA (Spot-Market)	84.43 EUR	80.71 EUR	-3.72 EUR
EUA (December-2023-Future)	85.27 EUR	81.52 EUR	-3.75 EUR
VER (Natural Carbon Offsets)	1.98 USD	1.70 USD	-0.18 USD
VER (CORSIA eligible Carbon Offsets)	0.87 USD	0.87 USD	+0.00 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	88.84 USD	90.41 USD	+1.57 USD
EURO (Currency, Forex)	1.0785 USD	1.0701 USD	-0.0084 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

Dear Madam or Sir,

there is news related to global warming that you first must get used to. This includes, for example, an official curfew because it is raining. In summer, in Spain. An indefinite curfew was imposed yesterday for around 10,000 people in the Catalan municipality of Alcanar in the north-east of the country because of the risk of severe flooding. The population was advised to go to the upper floors of their houses if possible. Within only 24 hours, 215 litres of rain per square metre had fallen in Alcanar.

In Germany, the gap in the reduction of climate-damaging greenhouse gases, which the Federal Environment Agency (UBA) put at up to 331 million tonnes of CO2 equivalents in its projection report, could amount to “only” slightly 200 million tonnes in the best case, but only if the German government also consistently implements all the climate precautions adopted and planned by October 2022. These projections refer to Germany’s targets set out in the Climate Act.

However, there is a second gap, to which the Frankfurter Allgemeine drew attention last week. In addition to the national reduction targets, the states of the European Union have, as is well-known, approved to reduce their carbon emissions as a community by 55 percent until 2030. To this end, the EU states agreed, among other things, on the Effort Sharing Regulation (ESR). This regulation primarily covers the main polluters of emissions, namely transport and the building sector. It stipulates that large emitters like Germany must reduce their emissions from 2021 to 2030 by half. If an EU state fails to do so, it must buy emission allowances on the market. If these are not sufficiently available, penalties can be imposed. In relation to Germany, this means – with a projected gap of at least 152 million tonnes of CO2 – compensation payments in the double-digit billions.

To still meet the climate targets, the UBA and other experts called for, among other measures, a significant price increase for national emission certificates for fuels used in transport and buildings (nEZ). In a paper published in July, the UBA proposed raising the price of nEZ to 90 euros as early as next year. In more recent reports, a price of 200 euros per tonne is even assumed from 2025, in another it is 255 euros from 2027.

But whatever measures are taken to narrow the huge emissions reduction gap, they must be recognisably socially cushioned. And the earlier and more consistently this is started, the smaller the financial pressure wave that will come our way – not to mention the impact on our environment.

With the beginning of September, the period with reduced auction volumes ended last Friday. But this circumstance did not trigger any reaction on the European carbon market. In a flat range of about 3 euros, the price moved uninspired along the 86-euro mark. Now that most traders are returning to their desks, it will be interesting to see in which direction the market will break out of the narrowing price corridor.

(Average Quotes Exchange / OTC)
Instrument	25/08/23	01/09/23	Change
EUA (Spot-Market)	84.55 EUR	84.43 EUR	-0.12 EUR
EUA (December-2023-Future)	85.39 EUR	85.27 EUR	-0.12 EUR
VER (Natural Carbon Offsets)	1.65 USD	1.98 USD	+0.33 USD
VER (CORSIA eligible Carbon Offsets)	0.85 USD	0.87 USD	+0.02 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	84.61 USD	88.84 USD	+4.23 USD
EURO (Currency, Forex)	1.0798 USD	1.0785 USD	-0.0013 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

Dear Madam or Sir,

Climate change, with its many manifestations, has led to sad records in forest fires over the past week. Greek Citizen Protection Minister Vassilis Kikilias, for example, complained at a press conference that it was “the worst summer since records began.” According to the EU Commission, the fires near the northeastern port city of Alexandroupolis are in fact the largest fires in the history of the European Union. More than 73,000 hectares have already been burnt, the Commissioner for Humanitarian Aid and Crisis Management, Janez Lenarcic, announced.

But this fire is almost nothing compared to the fires in Canada. This year, fires in Canada have already destroyed an area larger than the total area of Greece.

Another example is currently being provided by the Panama Canal, where a persistent drought is significantly restricting traffic on the waterway and will continue to do so for the next few months. Numerous freighters must wait for their passage, and an imposing shipping congestion is already forming in front of the trade passage. This is causing supply chains worldwide to come to a standstill.

It sounds somewhat perplexing when, at the same time, the current projection report of the Federal Environment Agency takes place and concludes that the German government’s planned new climate protection measures could leave a gap of up to 331 million tonnes in the reduction of climate-damaging greenhouse gases by 2030. The goal of making Germany climate-neutral by 2045 would not be achieved under the given circumstances, writes the Federal Environment Agency.

After harsh criticism, also from the scientific community, of the new version of the Climate Protection Act, a broad alliance of 42 associations called on the government to take immediate action to “achieve the German climate targets by 2030”. A “socially just implementation of the transformation” was also important, the joint statement said.

However, the Süddeutsche Zeitung also had something positive to report on Thursday. According to it, the net operator Tennet has closed a gap in the electricity axis from northern Germany to the south. On Wednesday, a new high-voltage line between Ganderkesee (Oldenburg district) and St. Hülfe (Diepholz) was put into operation, closing an important connection between the North Sea and North Rhine-Westphalia, as the company announced on the commissioning. As a result, more wind power can now be fed into the grid and directed southwards, thus significantly reducing the shutdown of wind turbines. In total, the line can transmit 3.3 gigawatts of electricity from the coast to the south. This corresponds to the output of two large power plants.

This means that NRW as an industrial region will be supplied with more green electricity, which could also take place in the production of green hydrogen.

The market for European emission allowances was extremely volatile last week, with a price range of around six euros. The December contract briefly exceeded the 90-euro mark at its high.

After the announcement of the agreement in the dispute over wages and working conditions at three liquefied natural gas terminals in Australia, quotations for natural gas fell rapidly and dragged the EUA down. After hitting a two-week low on Friday morning, European carbon prices reversed direction as, on the one hand, energy prices also rose again and, on the other, one of the best auction results this year encouraged traders with short positions to take profits.

(Average Quotes Exchange / OTC)
Instrument	18/08/23	25/08/23	Change
EUA (Spot-Market)	87.18 EUR	84.55 EUR	-2.63 EUR
EUA (December-2023-Future)	88.01 EUR	85.39 EUR	-2.62 EUR
VER (Natural Carbon Offsets)	1.58 USD	1.65 USD	+0.07 USD
VER (CORSIA eligible Carbon Offsets)	0.73 USD	0.85 USD	+0.12 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	84.75 USD	84.61 USD	-0.14 USD
EURO (Currency, Forex)	1.0870 USD	1.0798 USD	-0.0072 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

Dear Madam or Sir,

Last week, the EU presented the report on the development of greenhouse gas emissions in the EU, which are emitted by companies and households.

According to this, a total of 941 million tons of CO2 or its equivalent in other greenhouse gases (CO2e) were emitted in the first quarter of 2023. Compared to the same period in 2022, this is a drop of a good three percent. In the first quarter of 2010 it was still 1,172 tons, since then total emissions in the EU have been falling steadily, with EU emissions trading system making an outstanding contribution.

Households were the biggest sources of emissions at 24%, followed by the manufacturing sector at 20%, energy supply at 19% and agriculture at 13%. In the transport sector, emissions rose to 10%, which is why further measures are required here in particular.

In the past exchange trading week, the EU emission allowances again increased by 1.5% on a weekly closing price basis and closed between the 38-day line (EUR 88.42) and the 200-day line (EUR 86.61) at EUR 88.01 for the December-2023-Future. A breakout towards the EUR 90 mark followed on Thursday, but this was short-lived.

This week the auction volume at the Leipzig EEX has still been halved again with a total of 4,963,000 EUAs over four trading days. From Friday next week, the regular offer will start again at the beginning of September.

(Average Quotes Exchange / OTC)
Instrument	11/08/23	18/08/23	Change
EUA (Spot-Market)	85.88 EUR	87.18 EUR	+1.30 EUR
EUA (December-2023-Future)	86.73 EUR	88.01 EUR	+1.28 EUR
VER (Natural Carbon Offsets)	1.80 USD	1.58 USD	-0.22 USD
VER (CORSIA eligible Carbon Offsets)	0.93 USD	0.73 USD	-0.20 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	86.57 USD	84.75 USD	-1.82 USD
EURO (Currency, Forex)	1.0946 USD	1.0870 USD	-0.0076 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