Month: October 2022

Dear Madam or Sir,

Since Germany missed its climate targets in the years 2013 to 2020 in the sectors not yet included in EU emissions trading, it now has to buy a total of 11 million emission certificates from the states that have exceeded their greenhouse gas reduction targets. The failure to meet the target was especially evident in the building and transport sectors, for which the national German emissions trading system in accordance with the German Fuel Emissions Trading Act was introduced last year.

The states, which now generate proceeds from the sale of their emission rights, must now invest this in additional climate protection measures, as discussed by European State Secretary Sven Giegold (Greens). According to Giegold, these include electrically operated buses in Hungary, energy-efficient renovation of private homes in the Czech Republic, and schools and public buildings in Bulgaria.

The UN climate summit COP-27 (Conference Of Parties) for participants from 197 countries begins on Sunday in Sharm el-Sheikh, Egypt. The motto is “Together for a fair, ambitious implementation NOW”. This year’s target is to realize the Paris Climate Protection Agreement of 2015, the realization of annual climate financing of 100 billion US dollars for developing countries and more ambitious greenhouse gas reduction targets for the individual contracting states.

In the past week, EU emission allowances have increased massively, as many market participants have covered their short positions by buying (short covering). In addition, the gas price (natural gas) on the exchange has fallen to a level that is currently below that of October last year, as the EU gas storage facilities are now 93% full. As a result, participants in the gas market had to provide less margin and used the liquidity for purchases in the EU ETS.

On a weekly closing basis, Emission Allowances were up 17.5% to close at EUR 81.21 and shows their biggest weekly increase in more than five years.

This week, a total of 9,393,000 EUAs will be offered for auction in four auctions at the Leipzig EEX.

(Average Quotes Exchange / OTC)
Instrument	21/10/22	28/10/22	Change
EUA (Spot-Market)	69.03 EUR	81.16 EUR	+12.13 EUR
EUA (December-2022-Future)	69.10 EUR	81.21 EUR	+12.11 EUR
VCU (Voluntary Carbon Units ø)	6.38 USD	6.75 USD	+0.37 USD
VER (Gold Standard Spotmarkt ø)	3.20 USD	3.36 USD	+0.16 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	93.52 USD	96.17 USD	+2.65 USD
EURO (Currency, Forex)	0.9862 USD	0.9964 USD	+0.0102 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,

Despite the Ukraine war and the associated increased use of coal in Asia and Europe for energy production, global emissions of carbon dioxide will only increase by less than 1% in 2022 according to calculations by the International Energy Agency (IEA).

According to the head of the IEA, Fatih Birol, this is due to the increased worldwide expansion of renewable energies, above all photovoltaics and wind power, which increased by 700 terawatt hours. Furthermore, the increased use of electromobility has made a significant contribution to the reduction in the transport sector.

Last Wednesday, the responsible committee for energy and climate protection in the Bundestag decided that, contrary to the original plans of the federal government, waste incineration would be postponed by a year and should therefore not be included in national emissions trading in 2023, but only in 2024 in accordance with the Fuel Emissions Trading Act (BEHG).

The prices for CO2 certificates in the mandatory EU emissions trading system (EU ETS) moved sideways in the past week in a range between 66.26 and 69.69 euros.

A total of 12,494,500 EUAs will be auctioned on the EEX this week on all five trading days, as well as any desired quantity of national German emission certificates for 2022 on Tuesday and Thursday.

(Average Quotes Exchange / OTC)
Instrument	14/10/22	21/10/22	Change
EUA (Spot-Market)	67.95 EUR	69.03 EUR	+1,08 EUR
EUA (December-2022-Future)	68.03 EUR	69.10 EUR	+1.07 EUR
VCU (Voluntary Carbon Units ø)	7.89 USD	6.38 USD	-1.51 USD
VER (Gold Standard Spotmarkt ø)	3.76 USD	3.20 USD	-0.56 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	91.80 USD	93.52 USD	+1.72 USD
EURO (Currency, Forex)	0.9721 USD	0.9862 USD	+0.0141 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

Ladies and Gentlemen

Greta Thunberg, who at just 19 has already become the icon of the global climate movement, gave a remarkable interview to German television last week and received widespread acclaim for her nuanced and considered remarks. In essence, the young activist called for nothing less than a cultural change: “The longer we delude ourselves that we can solve the climate emergency within the existing system without treating it like a real crisis, the more time we will lose.” She cited the Corona measures as a comparison. These had impressively demonstrated that mankind was indeed capable of responding appropriately to a global emergency and managing it. In general, people have even accepted significant personal restrictions in their lives for this purpose, and this is also because the media have reported on the dangers and the decided countermeasures 24/7. This has had a great influence on political decisions as well as on the acceptance of the population. But this is far from being the case with climate change. The most important thing, therefore, says Thunberg, is to “recognise that we are in an emergency, otherwise everything else is useless!”

Of course, she would remain a climate activist for life, but actually we need billions of climate activists who understand climate change as a real crisis and act accordingly. In this context, she quoted the UN Emissions Report, according to which “by 2030 we will be using twice as much fossil energy as would be compatible with the 1.5-degree target and we are already at 1.2 degrees today”.

John Ploegg, a distinguished analyst, recently pointed out another important aspect: he warned that clean energy production technologies also require many raw materials, including rare earths. The electronic controls, storage systems, electric motors and transformation technology related to renewable energy rely on metals such as copper, lithium, nickel and cobalt, as well as the rare elements gallium, germanium, indium, tellurium and numerous platinum group elements. However, many of these metals are mainly found in countries with higher geopolitical and social risks. It is therefore necessary to adapt to this at an early stage in order not to fall into a new dependency trap.

The carbon market again had a sideways movement last week, with December future rallying to €69.50 on Thursday, but falling again in a narrow range on Friday. The market laments the lack of real signals from politicians regarding possible planned interventions in the ETS. Analysts, meanwhile, have estimated that it could take four years for EUA prices to recover to recent levels if REPowerEU sales were to take place.

Oil prices were similarly disoriented, as the market was spoilt for choice between announcements about supply curbs on the one hand and an oil price cap on the other. Half of the significant gains from the previous week were given back.

(Average Quotes Exchange / OTC)
Instrument	07/10/22	14/10/22	Change
EUA (Spot-Market)	68.55 EUR	67.95 EUR	-0.60 EUR
EUA (December-2022-Future)	68.66 EUR	68.03 EUR	-0.63 EUR
VCU (Voluntary Carbon Units ø)	8.61 USD	7.89 USD	-0.72 USD
VER (Gold Standard Spotmarkt ø)	3.76 USD	3.76 USD	+0.00 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	97.92 USD	91.80 USD	-6.12 USD
EURO (Currency, Forex)	0.9742 USD	0.9721 USD	-0.0021 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

Ladies and Gentlemen

in the first three quarters of this year, emissions from the EU energy sector have risen by about 8% compared to 2021, according to data from a climate analysis research institute. This development unfortunately was to be expected, not least because coal-fired power generation had to be intensified. So Russia’s invasion of Ukraine has paradoxically meant that it is not electricity generation powered by natural gas that can help phase out coal as a bridging technology, but that it is now – at least temporarily – the other way round.

But of course, this does not change the overarching goal of decarbonising the economy, which is to be achieved primarily by switching from fossil fuels to renewable energies. Of course, a short-term plus for coal is a step backwards, as it is simply the most CO2-intensive energy source, but the complete abandonment of fossil energy must be achieved as quickly as possible.

News from the energy company RWE is a positive signal in this respect. RWE wants to bring forward the coal phase-out by eight years to 2030. This is included in the key points of an agreement between RWE, the Federal Ministry of Economics and the Ministry of Economics of North Rhine-Westphalia. The decision would leave about 280 million tonnes of coal in the ground. This would correspond to about 280 million tonnes of CO2 that would no be emitted any more. RWE boss Markus Krebber explained that the phase-out would be socially acceptable and would not be at the expense of the employees. RWE also wants to invest massively in renewable energies in order to make an additional contribution to the phase-out of coal.

This will also be noted with pleasure by the EU parliamentarians who, with the “Fit for 55” programme, are pursuing the goal of reducing net greenhouse gas emissions by at least 55% by the year 2030 and adapting the legislation required for this. This includes, among other things, strengthening and tightening the European Emissions Trading Scheme (ETS) and a new, stand-alone emissions trading system for buildings and road transport. This is supposed to be an essential step towards achieving climate neutrality by 2050, which in turn is the EU’s binding goal under the European Climate Change Act.

Another programme currently under heated discussion, entitled RePowerEU, is now unfortunately aiming in exactly the opposite direction with the question of whether this programme should be partly financed by intervening in the ETS or whether electricity costs can be reduced by a temporary glut of EUAs. Decisions on this have not yet been made, but the discussion alone has already had a significant impact on the carbon market. For example, the President of the European Commission, Ursula von der Leyen, called on Wednesday for an increase in funding for the REPowerEU programme, as otherwise the block would run the risk of fragmenting as member states introduce different levels of support for citizens and companies. Immediately after this news, EUA in December futures plunged from their daily high of 71.36 to below 67 euros.

The carbon market apparently fluctuated during the week between an initially bullish sentiment, which was also influenced by the sharp rise in oil prices, on the one hand, and uncertainty about possible market intervention on the other. The December benchmark contract traded between around €64.50 at the low and €71.36 at the high, repeating almost identically the performance of the previous week.

(Average Quotes Exchange / OTC)
Instrument	30/09/22	07/10/22	Change
EUA (Spot-Market)	66.58 EUR	68.55 EUR	+1.97 EUR
EUA (December-2022-Future)	66.73 EUR	68.66 EUR	+1.93 EUR
VCU (Voluntary Carbon Units ø)	8.18 USD	8.61 USD	+0.43 USD
VER (Gold Standard Spotmarkt ø)	3.96 USD	3.76 USD	-0.20 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	85.46 USD	97.92 USD	+12.46 USD
EURO (Currency, Forex)	0.9797 USD	0.9742 USD	-0.0055 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

Ladies and Gentlemen

Last week, the German federal government decided on a so-called “defence shield” with a volume of 200 billion euros so that gas and electricity prices remain affordable for companies and consumers. The exact design will be worked out in the coming weeks.

The German Bundestag is currently deliberating on a second law to amend the Fuel Emissions Trading Act (BEHG), in which CO2 emissions from the transport and building sectors are priced. A major point of criticism is the inclusion of biomass firing systems in national emissions trading under BEHG, which is planned under certain conditions, as this would further increase prices.

There is also further criticism of the inclusion of waste incineration plants from next year, since this would make prices correspondingly higher, especially for municipal waste, and these costs would be passed on to companies and consumers. In addition, the waste could then be disposed of in other countries that do not have a price for greenhouse-gas emissions from municipal waste.

From 2026, the building and transport sectors are to be integrated into a second European emissions trading system (EU ETS2), which will make national emissions trading in Germany obsolete.

In European emissions trading system, prices moved sideways last week in a range of EUR 64.10 to EUR 71.95 for the December benchmark contract for EUAs.

In this trading week, four auctions with a total of 9,393,000 EUAs will take place at the EEX, in which certificates from the European and German contingent will be auctioned.

Due to the end of the submission of the German national emission certificates (nEZ) for the year 2021 last Friday, auctions for 2022 nEZ have been held regularly on Tuesdays and Thursdays since last week. The last date for this year is Thursday, December 8th, 2022.

(Average Quotes Exchange / OTC)
Instrument	23/09/22	30/09/22	Change
EUA (Spot-Market)	65.61 EUR	66.58 EUR	+0.97 EUR
EUA (December-2022-Future)	65.77 EUR	66.73 EUR	+0.96 EUR
VCU (Voluntary Carbon Units ø)	9.40 USD	8.18 USD	-1.22 USD
VER (Gold Standard Spotmarkt ø)	4.03 USD	3.96 USD	-0.07 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	86.75 USD	85.46 USD	-1.25 USD
EURO (Currency, Forex)	0.9690 USD	0.9797 USD	+0.0107 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