Month: October 2019

Dear Sir or Madam,

Last week, the German Cabinet introduced a law to introduce a national emissions trading scheme for fuels. The aim is to gradually make the burning of fossil fuels for transport and heating more expensive, thus making the switch to climate-friendly alternatives more attractive. In return, the revenues will be refunded to the citizens in the form of reductions in the electricity price, in the commuting allowance and in the housing benefit, or invested in climate protection measures. The law now goes into parliamentary deliberations.

As Federal Environment Minister Svenja Schulze explained in more detail, emissions trading will start in 2021, initially with a fixed CO2 price of 10 euros per tonne. This corresponds gross to 2.8 cents per litre of petrol, 3.2 cents per litre of diesel, 3.2 cents per litre of heating oil and 0.2 cents per kilowatt hour of natural gas. In 2022, the price will then be 20 euros per tonne. 2023 to 2025 the certificates are issued with a rising fixed price (25-35 euro per ton CO2). In 2026, the certificates will be auctioned in a corridor of 35 euros to 60 euros per tonne of CO2. In 2025, the maximum and minimum prices for the period from 2027 onwards will be determined. However, citizens who use fossil fuels for heating or driving do not have to trade certificates themselves. This is the responsibility of the approximately 4000 gas suppliers, refineries and other companies that are subject to energy tax.

In the first five years, this new, national emissions trading scheme will basically act like a tax due to the fixed price and will only become a genuine market instrument from 2026, just as the mandatory European emissions trading scheme has been for a long time, which – after the appropriate political corrective measures – has also proved its worth.

Although the prices now fixed are separate from the ETS, they may provide some indication as to where the European pollution rights journey could lead in the coming trading period.

The fact that the introduction of the new emissions trading scheme in Germany is not really a national solo effort in the narrower sense was also made clear last week in Berlin at the International Carbon Pricing Week. Representatives from more than 50 countries and regions exchanged their experiences with carbon pricing instruments and also discussed new approaches to reducing greenhouse gas emissions. The conference made it clear that the number of countries using either a CO2 trading system or another CO2 levy to achieve climate neutrality is constantly growing.

A look at the well-established ETS shows a continuing uncertainty among market participants for the past trading week, which, among other influences, was caused by the still unresolved issue of Brexit. This strong uncertainty is reflected in a range between the highest and lowest price of a good two euros. This resulted in a price axis of 25.25 EUR. The CO2 market was unable to profit from the sharp rise in oil prices.

(Average Quotes Exchange / OTC)
Instrument	18/10/2019	25/10/2019	Change
EUA (Spotmarket)	25.87 EUR	24.95 EUR	-0.92 EUR
EUA (December-2019-Future)	25.88 EUR	24.97 EUR	-0.91 EUR
CER (Spotmarket)	0.21 EUR	0.20 EUR	-0.01 EUR
ICE Brent Crude Oil (Benchmark Future)	59.29 USD	61.69 USD	+2.40 USD
EURO (Currency, Forex)	1.1169 USD	1.1080 USD	-0.0089 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into EUA. 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 Sir or Madam,

Brexit remains the topic on the financial markets and thus also on the courses for European CO2 certificates. The British Parliament forced Boris Johnson on Saturday to ask the EU for a Brexit extension. The EU immediately reached two letters – one requesting an extension of the deadline, which Johnson did not personally sign, and a second, expressing his displeasure at extending the deadline, which included his signature.

The EU will now decide on a deferral until 31.01.2020 by the end of the month. However, the topic will be an important topic at the beginning of the week at the European Parliament. The chances of further British voting on remaining in the EU have also increased, but a decision by the EU to extend the deadline has to be taken. Tens of thousands of British marched at the weekend from London Hyde Park to Parliament and also demanded a referendum again.

Last week’s development in London was viewed positively in the market for CO2 emission rights, and prices for EUA started this morning with more than one percent growth. It remains to be expected that news on political decisions in Brussels and London will continue to influence prices over the coming days.

This week, a total of 15,782,500 EUA will be auctioned on the Leipzig EEX on all five trading days.

(Average Quotes Exchange / OTC)
Instrument	11/10/2019	18/10/2019	Change
EUA (Spotmarket)	24.40 EUR	25.87 EUR	+1.47 EUR
EUA (December-2019-Future)	24.44 EUR	25.88 EUR	+1.44 EUR
CER (Spotmarket)	0.21 EUR	0.21 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	60.60 USD	59.29 USD	-1.31 USD
EURO (Currency, Forex)	1.1043 USD	1.1169 USD	+0.0126 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into EUA. 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 Sir or Madam,

When we talk about the advancing global warming, we repeatedly focus on certain regions of our planet. These include, for example, the melting polar caps in the Arctic and Antarctic, the melting of glaciers or the softening permafrost. However, the consequences of global warming have so far not explicitly mentioned one region that we know well: the Mediterranean. The intergovernmental organisation UfM (Union for the Mediterranean), which was founded in 2008, recently presented the first study on climate and environmental change in the Mediterranean region at a conference in Barcelona. The study was developed by more than 600 independent scientists from 35 countries – and the result is: “frightening”.

According to a report published this weekend by “Rheinische Post online”, the respected German ecologist Wolfgang Cramer in Barcelona pointed out that hardly any other region of the world is as threatened by climate change as the Mediterranean – where warming is progressing 20 percent faster than the global average. The maximum warming of 1.5 degrees fixed in the Paris Agreement has already been reached there.

The study warned that some islands and coastal strips, where 30 percent of the population live, would disappear from the scene during next generation. In addition, there is a risk of salinization of groundwater, which will result in around 250 million people suffering from water shortages. In addition, the scientists warned of mass extinction of marine fauna, ever more frequent heat waves, increasing droughts, mega forest fires and the spread of the Asian tiger mosquito and other disease vectors.

Against this background, the next world climate conference, which will take place from 2 to 14 December in Santiago de Chile, is awaited with particular excitement. Last week a preparatory conference was held at the invitation of Costa Rica. The focus was on the design of international market mechanisms. The particular challenge here is the establishment of a reliable billing system.

In the first two weeks of October, the European CO2 market experienced a veritable rollercoaster ride. Driven by political news and the resulting fluctuations in the energy sector, the price for the European Pollution Rights (EUA) fell from just over 25 euros to 22 euros. In the past week, the price initially stabilized, before it was able to gain significantly again on Thursday and Friday due to the positive Brexit news. The price for the December contract on the London ICE quickly exceeded both the 23- and 24-euro mark.

(Average Quotes Exchange / OTC)
Instrument	04/10/2019	11/10/2019	Change
EUA (Spotmarket)	22.94 EUR	24.40 EUR	+1.46 EUR
EUA (December-2019-Future)	23.01 EUR	24.44 EUR	+1.43 EUR
CER (Spotmarket)	0.21 EUR	0.21 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	58.40 USD	60.60 USD	+2.20 USD
EURO (Currency, Forex)	1.0976 USD	1.1043 USD	+0.0067 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into EUA. 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 Sir or Madam,

According to a report by the German magazine Spiegel, the climate protection law, which already appears to be less ambitious in its original form, should be further weakened. Among other things, no national target for CO2 reduction is planned for 2040 and the formulation of being greenhouse gas-neutral by 2050 has been weakened by the fact that this should only be “pursued” without obligation. In the end, all that remains is for Germany to reduce its greenhouse gas emissions by 55% by 2030 compared to 1990 levels. Furthermore, the Federal Government is now to be authorized, without the consent of the Federal Council, to decide on changes in the annual emission levels by means of a statutory ordinance. On 06.12.2019 the law should now be decided by the Bundesrat and the Bundestag. Robert Habeck of the Greens had already announced after the launch of the package to want to enforce improvements, especially in the starting price of the certificates, which should cost according to ideas of the grand coalition at the beginning only 10 € and thus have no meaningful control effect.

Prices for European CO2 allowances also fell again in the past week, reflecting stronger global economic risks and Brexit, which is likely to be over at the end of the month. From a technical point of view, the EUAs are now close to an important support line, which has its origins in the second quarter of 2018. They should not break this sustainable on a weekly basis, otherwise the market would be a bear case in the longer term. A total of 16,584,000 certificates will be auctioned at the Leipzig EEX this week, including 801,500 EUAA for aviation. In the coming week, there will be only 11,068,000 EUAs.

(Average Quotes Exchange / OTC)
Instrument	27/09/2019	04/10/2019	Change
EUA (Spotmarket)	25.29 EUR	22.94 EUR	-2.35 EUR
EUA (December-2019-Future)	25.30 EUR	23.01 EUR	-2.29 EUR
CER (Spotmarket)	0.21 EUR	0.21 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	61.04 USD	58.40 USD	-2.64 USD
EURO (Currency, Forex)	1.0938 USD	1.0976 USD	+0.0038 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into EUA. 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