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