Month: April 2023

Dear Madam or Sir,

11 years ago, we brought up the idea of an import tax on products and services (Carbon Import Tax) in our market report as a possible solution to reduce distortions of competition for European producers and service providers.

Ultimately, the European Union has now implemented this idea and calls it the Carbon Border Adjustment Mechanism, or CBAM for short. Exact details of the implementation are still unclear, but the import of products from countries that do not have sufficient pricing of greenhouse gases will be subject to corresponding penalty taxes.

In addition, the inclusion of shipping from next year, the Europe-wide pricing of the transport and building sectors and process heat in small industry in EU emissions trading were finally approved last Monday. A time-limited upper limit of 45 euros per ton of CO2 should apply here, but it is currently questionable how this should actually be implemented, since it should ultimately remain a market economy mechanism.

Furthermore, a climate social fund of 65 billion euros is to be financed from the income from CO2 pricing, which is intended to cushion social hardship for households with low incomes.

This was all expected by the market. In addition, the number of buyers from companies subject to the compliance duties in EU emissions trading decreased, so that demand for European emission allowances continued to fall in the past week. The prices of the EUAs also fell in the last week and the emission certificates lost more than 4% on a weekly closing basis.

This week, a total of 11,842,500 EUAs will be auctioned on all five trading days at the Leipzig Energy Exchange EEX. In the next week, however, it will only be 6,757,000 due to the public holiday and the lack of a scheduled auction in Poland.

(Average Quotes Exchange / OTC)
Instrument	14/04/23	21/04/23	Change
EUA (Spot-Market)	92.34 EUR	88.25 EUR	-4.09 EUR
EUA (December-2023-Future)	93.84 EUR	89.72 EUR	-4.12 EUR
VER (Natural Carbon Offsets)	2.76 USD	2.63 USD	-0.13 USD
VER (CORISA eligible Carbon Offsets)	1.77 USD	1.69 USD	-0.08 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	86.46 USD	81.77 USD	-4.69 USD
EURO (Currency, Forex)	1.0994 USD	1.0990 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. 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,

Germany shut down its last three nuclear power plants last week. The move away from nuclear energy was initiated after the nuclear catastrophe in Fukushima in 2011 by former Chancellor Dr. Angela Merkel.

Environmental protection organizations and the Greens involved in the federal government are celebrating Germany’s complete phase-out of nuclear power, but there are also critical voices.

Last Friday, “RePlanet DACH” wrote an open letter to Federal Chancellor Olaf Scholz, which was signed by 25 international scientists, including climate researchers, physicists, economists and two physics Nobel Prize winners.

In it they call on the federal government to continue to operate the nuclear power plants in the interest of global climate protection. “We welcome the efforts of the federal government to reduce greenhouse gas emissions in Germany, a country of particular economic and political importance in Europe, in accordance with the international treaties that have been concluded. However, in 2022 the carbon emission targets were exceeded by 40 million tons due to the increased use of coal power due to savings in natural gas consumption, and estimates for 2023 assume 38 million tons. The Emsland, Isar II and Neckarwestheim II nuclear power plants delivered a total of 32.7 billion kilowatt hours of low-emission electricity in 2022. German private households recently consumed an average of 3190 kWh per year of electrical energy. Thus, these three power plants can supply more than 10 million or a quarter of German households with electricity. The lower amount of electricity required from coal-fired power plants could save up to 30 million tons of CO2 per year.”

The demand for CO2 emission rights should therefore be correspondingly high from the operators of the coal-fired power plants alone and lead to an additional increase in the price of German electricity, even if a large part will certainly already be priced in.

In the second week of Easter, however, demand in the EU emission rights market was lower and EUAs fell 2.9% compared to the previous week. After Tuesday still showed bullish tendencies, the rest of the shortened trading week was bearish.

This week, a total of 9,166,500 EUAs will be offered for auction on the Leipzig EEX over four trading days. The demand after the Easter holidays, shortly before the end of the submission deadline, will show whether many system operators still have to procure EUAs “last minute”.

(Average Quotes Exchange / OTC)
Instrument	06/04/23	14/04/23	Change
EUA (Spot-Market)	95.14 EUR	92.34 EUR	-2.80 EUR
EUA (December-2023-Future)	96.66 EUR	93.84 EUR	-2.82 EUR
VER (Natural Carbon Offsets)	3.27 USD	2.76 USD	-0.51 USD
VER (CORISA eligible Carbon Offsets)	2.18 USD	1.77 USD	-0.41 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	84.83 USD	86.46 USD	+1.63 USD
EURO (Currency, Forex)	1.0917 USD	1.0994 USD	+0.0077 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,

Buildings are responsible for about 40% of global greenhouse gas emissions. In the USA, they also stand for the consumption of 70% of the electricity generated there.

The US billionaire Tom Steyer is now planning to make buildings climate-neutral within three years through his company Galvanize Climate Solutions using renewable energies and modernization measures.

Commenting on this plan, Joseph Sumberg, CEO of Galvanize Real Estate, said: “This is a real estate strategy aimed at decarbonization … Capitalism will look at this successful strategy and replicate it.”

Another example is BlocPower, a New York company backed by the Microsoft Climate Innovation Fund and investment bank Goldman Sachs. The startup recently raised $155 million in investments to perform the energy renovation of green buildings and is now starting over 5,000 homes and buildings.

Of course, American billionaires in particular are not doing this for purely altruistic reasons. Rather, investors see energy-related renovations as a must-have and an important criterion when evaluating real estate. Otherwise, unrenovated existing properties will become distressed objects.

What the Americans are showing us will become more and more important to funds, investment houses and banks worldwide, which means that the real estate industry, as one of the largest emitters, will make a significant contribution to decarbonization.

From 2027, the real estate sector will be integrated into the EU emissions trading system EU ETS, which has already been able to gain experience with Germany’s national emissions trading system nEHS since 2021. Currently, the voices are increasingly moving in the direction of not creating a second EU emissions trading system, but instead mapping the pricing with the normal EU ETS. By then, at the latest, properties that have not been renovated become expensive problem cases.

In the past week, prices for EU emission allowances have continued to move towards the 100-euro-mark as the auction volume is reduced due to the Easter holidays, compliance purchases before the 30/04/2023 be made and crude oil also posted a similar increase.

Technical seen, the next relevant resistance would be at 100 euro and there is currently no reason why this resistance should not be tested.

(Average Quotes Exchange / OTC)
Instrument	31/03/23	06/04/23	Change
EUA (Spot-Market)	90.48 EUR	95.14 EUR	+4.66 EUR
EUA (December-2023-Future)	91.93 EUR	96.66 EUR	+4.73 EUR
VER (Natural Carbon Offsets)	3.39 USD	3.27 USD	-0.12 USD
VER (CORISA eligible Carbon Offsets)	2.07 USD	2.18 USD	+0.11 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	79.87 USD	84.83 USD	+4.96 USD
EURO (Currency, Forex)	1.0841 USD	1.0917 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

Dear Madam or Sir,

Last week, as part of the “Fit for 55” climate package, the EU Parliament and the EU member states agreed to increase the share of renewable energies in the EU from 32% to 42.5% by 2030. The rate is currently around 22%.

In addition, partial targets were agreed for the building, transport and industry sectors in order to advance the integration of renewable energies here as well.

In addition, last week the European Commission outlined the plan to start the early auctioning of EU emission allowances as part of the REPowerEU initiative from July 2023. This so-called “frontloading” should offer 16.5 million more EUAs in the auctions this year.

Analysts had previously speculated that this process could start sooner and assumed a volume of 30-40 million additional EUAs for 2023.

The market took this reduction bullish and reacted visibly positively to it, with the December benchmark contract of the EUAs gaining 4.28% on a weekly closing basis and closing well above the EUR 90 mark again.

In the new trading week, prices could continue to be bullish, as only 7,227,000 EUAs are auctioned on three trading days due to Good Friday. In the next week, due to Easter Monday, a total of 9,433,500 EUAs will be auctioned at the Leipzig EEX on four trading days.

The new auction calendar with the new auction volumes should be published in the coming weeks.

(Average Quotes Exchange / OTC)
Instrument	24/03/23	31/03/23	Change
EUA (Spot-Market)	86.32 EUR	90.48 EUR	+4.16 EUR
EUA (December-2023-Future)	87.65 EUR	91.93 EUR	+4.28 EUR
VER (Natural Carbon Offsets)	3.04 USD	3.39 USD	+0.35 USD
VER (CORISA eligible Carbon Offsets)	2.06 USD	2.07 USD	+0.01 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	74.90 USD	79.87 USD	+4.97 USD
EURO (Currency, Forex)	1.0735 USD	1.0841 USD	+0.0106 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