Emissions Trading / Carbon Market News (27/12/2021)

Dear Ladies and Gentlemen,

Looking back to 2021, the carbon market has risen by over 140% since the beginning of the year. This significant price increase is largely due to the influence of numerous speculative investors. Hedge funds have made huge profits with their investments in European pollution rights in the past year and will continue to have a significant influence on price developments in the coming years. Companies that are under obligation to comply under the ETS have already felt the pain and must now – sooner than perhaps expected – adapt their strategic decisions to this high and further rising price level. In addition, so-called activist hedge funds seem to be exerting direct pressure on companies by pushing as shareholders to enforce more environmental protection in the companies. Obviously, the funds have realised that, due to the political environment and public perception, environmentally damaging corporate activities are also damaging to the company’s image and sales and lead to an economic dead end.

On Monday of the past trading week, the reference futures contract expired and the switch to the December 22 contract caused the price to rise significantly. The bullish market was also supported by news from the gas sector, so that as a result the 80-euro mark was again clearly overcome. In the course of the trading week, however, this level could not be maintained. During the auction-free period at the turn of the year, many traders’ desks were not busy, so that high volatility in the thin trading led to a nervous price movement. In the end, most of the initial gains were absorbed again.

  (Average Quotes Exchange / OTC)   
Instrument17/12/2124/12/21Change
EUA (Spot-Market)73.28 EUR76.84 EUR+3.56 EUR
EUA (December-2021-Future)73.28 EUR76.87 EUR+3.59 EUR
VCU (Voluntary Carbon Units ø)7.98 USD7.98 USD+0.00 USD
VER (Gold Standard Spotmarkt ø)8.53 USD8.53 USD+0.00 USD
nEZ (German National Carbon Units)25.00 EUR25.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)73.08 USD75.60 USD+2.52 USD
EURO (Currency, Forex)1.1237 USD1.1328 USD+0.0919 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. VCUs and VERs are average prices (CBL markets). 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 (20/12/2021)

Dear Ladies and Gentlemen,

Unfortunately, 2021 will once again make it into the top 10 of the hottest years since weather data began to be recorded. According to projections, the uninterrupted series of record years that began in 2015 will continue again this year. Which place it will take in this inglorious ranking is beside the point. Regionally, numerous climate records were indeed broken again in 2021. According to calculations, land temperatures in the northern hemisphere were on average higher in autumn than ever before and the Arctic continues to warm more than twice as fast as the rest of the world.

In this context, the latest press release of the German Federal Environment Agency is alarming, which states that the share of renewable energies in total electricity consumption will decrease noticeably in 2021 and, after 45.3 percent in 2020, will only reach the level of 2019 with about 42 percent. While total electricity consumption increased, five percent less electricity was generated from renewable sources than in the previous year due to weather conditions. The statement went on to say that renewable electricity production has risen continuously since 1997. So far, individual years with less wind and sun have mostly been compensated for by the addition of new power generation plants. However, this was not the case in 2021, also because only little capacity was added in 2019 and 2020.

This closely follows last Friday’s report by the International Energy Agency (IEA) that global electricity generation from coal will reach an all-time high again this year. The reason for this is the global economic recovery, which is increasing demand for electricity faster than low-carbon energy sources can keep up.

The carbon market first did not find any new orientation last week and so prices moved relatively steadily sideways in a range between 80 and 85 euros. However, this changed on Friday. At the start of trading, the EUA’s initially moved significantly upwards, before they then suffered the biggest daily decline in euros ever. Apparently, despite immediate denials, traders had been spooked in part by the threat of intervention and realised their profits in the run-up to the reference futures contract expiring today. In the process, the price of the EUA’s fell by around EUR 11.50.

  (Average Quotes Exchange / OTC)   
Instrument10/12/2117/12/21Change
EUA (Spot-Market)83.73 EUR73.28 EUR-10.45 EUR
EUA (December-2021-Future)83.73 EUR73.28 EUR-10.45 EUR
VCU (Voluntary Carbon Units ø)8.86 USD7.98 USD-0.88 USD
VER (Gold Standard Spotmarkt ø)8.67 USD8.53 USD-0.14 USD
nEZ (German National Carbon Units)25.00 EUR25.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)75,30 USD73.08 USD-2.22 USD
EURO (Currency, Forex)1.1316 USD1.1237 USD-0.0079 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. VCUs and VERs are average prices (CBL markets). 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 (13/12/2021)

Dear Ladies and Gentlemen,

In the last week of trading, the European carbon emission allowances reached a new all-time high of 90.75 euros per EUA amid high volatility, were unable to keep the level above the 90s and closed at 88.88. The expected market correction then came on Thursday, with prices falling by 10%. However, Friday was again shaped by the bulls, so that the trading week closed with a significant plus of 7%.

The reasons for the recent price explosion were manifold: Germany has established a new federal government under Chancellor Olaf Scholz (SPD), in which the Greens have received important posts such as the newly formed Ministry for Economic Affairs and Climate Protection as well as the Foreign Ministry and the Ministry of Agriculture. On the other hand, the oil price rose despite higher production volumes agreed by the OPEC, as various delivery bottlenecks were emerging, which brought Brent Crude Oil an increase of 7.6% on a weekly basis.

This week begins the last full week in which a total of 11,428,000 EUA are auctioned on the Leipzig EEX. The last auction of the year with 2,542,500 EUAs will take place on Monday, December 20th, 2021, before a three-week break begins.

Insofar as there is additional bullish news in the market environment, speculatively oriented market participants could see this as a reason to move the market towards the 100 mark again with regard to the auction break. Since many institutional investors are still involved, it remains to be seen whether they want to realize more profit-taking towards the end of the year or whether they are more interested in a high valuation of the holdings as of December 31, 2021. Today, however, the EUA are optimistic with a plus of more than 2%.

This week the last fixed price auctions in Germany’s national emissions trading system (nEHS) will take place at a fixed price of 25.00 euros per ton of CO2e, on Tuesday and Thursday.

In the coming year one can only buy a maximum of 10% of the certificates acquired this year in the nEHS via the fixed price auctions at a price of 25.00 euros. If you haven’t stocked up enough for 2021, we are at your disposal.

  (Average Quotes Exchange / OTC)   
Instrument03/12/2110/12/21Change
EUA (Spot-Market)78.23 EUR83.73 EUR+5.50 EUR
EUA (December-2021-Future)78.25 EUR83.73 EUR+5.48 EUR
VCU (Voluntary Carbon Units ø)7.56 USD8.86 USD+1.30 USD
VER (Gold Standard Spotmarkt ø)8.92 USD8.67 USD-0.25 USD
nEZ (German National Carbon Units)25.00 EUR25.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)70.01 USD75,30 USD+5,29 USD
EURO (Currency, Forex)1.1312 USD1.1316 USD+0.0004 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. VCUs and VERs are average prices (CBL markets). 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 (06/12/2021)

Dear Sir or Madam,

European greenhouse gas emission allowances rose a whopping 7.5% last week, even if they could not stay above the 80 euros per EUA mark, which was first conquered on Friday, at the weekly closing rate.

Another trigger was, despite the inconsistent energy price developments, information from a fund manager who still sees prices in the three-digit range in 2021. After the EUAs have already increased by a good 140% this year and have experienced a price increase of around 1,160% in the last five years, that would not be surprising, because an age-old stock exchange rule says: “the trend is your friend”.

For compliance buyers and portfolio managers, it is more difficult to answer the question of whether one should stock up at least part of the portfolio now or rather wait until there is a corresponding correction on the market.

From a technical point of view, the time would have come for the market to undertake a correction, which would have the first support in the area around 70 euros and then a little above the 60 euros mark.

In any case, the EU member states are currently extremely divided on how to react to this bull market, which makes short-term market intervention seem unlikely. However, statements from official sources alone could lead market participants to take short positions. The coming trading week will definitely remain interesting.

In the new trading week, a total of 11.4 million EUA will be auctioned on the Leipzig EEX on all five bank working days, as will the next week. On Monday, December 20th, 2021, an auction of 2,542,500 EUAs will take place for the last time this year; on the same day is also the last trading day of ICE-EUA-December-2021-Futures.

The first auction in 2022 will not start until the second calendar week on January 10th, and a total of 9,291,000 EUAs will be auctioned on four days in the second week.

In the national German emissions trading system, the available trading days are also drawing to a close. During this and the next trading week, only four fixed price auctions will take place on Tuesdays and Thursdays.

If companies subject to the tax do not take part in these dates, they only have the chance to get national emission certificates (nEZ) on the secondary market (OTC / over the counter) this year.

At a price of EUR 25.00 you can only purchase nEZ if you have already purchased some by the end of the year – and then only 10% of this amount. After that, the nEZ costs 30.00 euros or you can try to get OTC pieces on the secondary market.

  (Average Quotes Exchange / OTC)   
Instrument26/11/2103/12/21Change
EUA (Spot-Market)72.77 EUR78.23 EUR+5.46 EUR
EUA (December-2021-Future)72.78 EUR78.25 EUR+5.47 EUR
VCU (Voluntary Carbon Units ø)7.44 USD7.56 USD+0.12 USD
VER (Gold Standard Spotmarkt ø)8.68 USD8.92 USD+0.24 USD
ICE Brent Crude Oil (Benchmark Future)72.82 USD70.01 USD-2.81 USD
nEZ (German National Carbon Units)25,00 EUR25,00 EUR0,00 EUR
EURO (Currency, Forex)1.1316 USD1.1312 USD-0.0004 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. VCUs and VERs are average prices (CBL markets). 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