Month: November 2023

Dear Madam or Sir,

The missing billions in the German budget have serious effects on many areas of the economy.

The German economy is now being dubbed the “sick man of Europe” by “The Economist” and real estate prices in Germany have also fallen the most in a European comparison, with construction costs having risen the most in Europe.

Since real estate is responsible for around 40% of global emissions, it is a devastating signal from the current federal government that it is not providing sufficient funds to avert the construction crisis and is unable to adequately promote climate-friendly buildings. There is an urgent need for action here.

In order to generate the money needed, the German think tank Agora Energiewende has now brought into play an increase in the carbon price in German national emissions trading from the current 30 euros per ton to 60 instead of the previous 40 euros for 2024. This would secure 6.6 billion euros next year.

Ottmar Edenhofer, director of the Potsdam Institute for Climate Impact Research (PIK), also calls for a significant increase in the prices for carbon emissions in order to achieve an appropriate steering effect as quickly as possible and to generate sufficient income for the green transformation.

However, the current government still seems unable to implement the urgently needed climate money for German citizens to alleviate social problems caused by higher energy prices – a disgrace for politics and administration.

Prices in EU Emissions Trading System barely moved on a weekly closing basis within a range of EUR 74.65 to EUR 77.80. Nevertheless, at EUR 76.60, they are still well below the 38-day line (EUR 80.56) and the 200-day line (EUR 85.49) and thus show the ongoing bearish sentiment.

Companies subject to the EU compliance trading could potentially use the current market situation to cover parts of their 2023 portfolio.

And for the participants in Germany’s national emissions trading in accordance with BEHG, the last four trading days have begun this and next week. The absolute last trading day on EEX this year is December 7, 2023 during trading hours from 9:00 a.m. to 3:00 p.m.

Since only 10% of the volume in the register account as of December 31, 2023 can be purchased for 2023 at the current price of EUR 30.00, it is advisable to promptly and adequately stock up on 2023 national emission certificates.

(Average Quotes Exchange / OTC)
Instrument	17/11/23	24/11/23	Change
EUA (December-2023-Future)	76.55 EUR	76.60 EUR	+0.05 EUR
VER (Natural Carbon Offsets)	1.22 USD	0.99 USD	-0.23 USD
VER (CORSIA eligible Carbon Offsets)	0.78 USD	0.67 USD	-0.11 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	80.49 USD	80.03 USD	-0.46 USD
EURO (Currency, Forex)	1.0914 USD	1.0933 USD	+0.0019 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. 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 Madam or Sir,

Germany is now missing 60 billion euros from the climate and transformation fund after the Federal Constitutional Court ruled last week. These funds were originally intended to deal with the Corona crisis, but they should now be used to finance climate policy projects.

As a result, German budget planning has enormous problems that can only be solved through two measures – increasing revenue through taxes and duties or reducing planned expenditure. The FDP will probably not agree to the former, and the other two coalition parties will certainly not agree to the latter.

The next few weeks will remain interesting, especially since Monika Schnitzer, the chairwoman of the German federal government’s economic advisory committee has now brought an exception to the debt brake into play.

After the prices for European emissions rights were quite bullish until the middle of last week, they collapsed on Thursday and ended with a significant loss of more than 2% on a weekly closing price basis, thus joining the overall weakening energy complex of the last few days.

This week, 14,601,000 EUAs from tranches from the EU, Poland and Germany will be auctioned on EEX on all five trading days.

This year, in the German national emissions trading system, auctions will only be held on Tuesdays and Thursdays this week and the following two weeks. Due to the price increase from 30 to 40 euros next year, traders should calculate particularly carefully this year, as in the following year you can only buy 10% for the old year at a price of 30 euros.

(Average Quotes Exchange / OTC)
Instrument	10/11/23	17/11/23	Change
EUA (December-2023-Future)	78.70 EUR	76.55 EUR	-2.15 EUR
VER (Natural Carbon Offsets)	0.86 USD	1.22 USD	+0.66 USD
VER (CORSIA eligible Carbon Offsets)	0.56 USD	0.78 USD	+0.22 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	81.55 USD	80.49 USD	-1.06 USD
EURO (Currency, Forex)	1.0684 USD	1.0914 USD	+0.0230 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. 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 Madam or Sir,

This year’s United Nations World Climate Change Conference (COP28) in Dubai begins on 30 November and ends on 12 December. Since 2018, the conference has been complemented by the meeting of the parties to the Paris Agreement. Among other things, the EU will be calling for the phase-out of fossil fuels by 2050.

But global plans to subsidise fossil fuels stand in stark contrast to the goal of limiting global warming to 1.5 degrees. This is the conclusion reached by the United Nations Environment Programme (UNEP) and leading research institutes, universities and think tanks in a recent report, the Production Gap Report. It suggests that the amount of coal, oil and gas that countries plan to produce by 2030 is more than twice as much as would be compatible with the target agreed in the Paris climate agreement.

 “Governments’ plans to expand fossil fuel production undermine the necessary energy transition to net zero emissions, create economic risks and put the future of humanity at risk,” said UNEP Executive Director Inger Andersen.

However, in a vote on their demands for the UN Climate Change Conference last Tuesday, members of the European Parliament’s Environment Committee agreed that climate action needs to be accelerated in all areas to meet the goals of the Paris Agreement, and agreed to phase out fossil fuel subsidies by 2025 at the latest.

At the same time, the Brussels-based NGO Finance Watch warns against underestimating the impact of climate change on the economy and the financial system. Economists model climate risks in the same way as traditional financial risks, the organisation says in a report. “This means that economic models do not take into account that the damage caused by climate change will be exceptionally large, unpredictable and permanent,” writes the organisation, which produces specialist analyses of financial markets. As a result, current models lull policymakers into a false sense of security.

The price of European emission allowances fell to a new one-year low just below the 75 euro mark in the middle of last trading week, as traders continued to build up short positions in the face of very low demand and energy markets extended recent losses. The demand outlook in the energy sector remained subdued due to the mild weather, high wind power production and high gas storage levels.

The market recovered significantly in the second half of the week, peaking at EUR 78.86 for the December benchmark contract. Wednesday’s Commitment of Traders (CoT) figures had shown that investment funds had built up the largest total short position in two years and the largest net short position on record, giving the impression that traders were waiting now for the right time to rally.

Indeed, the sizeable short position could act as a limiting factor for further declines, but on the other hand, a real turnaround should be supported by a significant change in the market environment. Indeed, the substantial short position could act as a limiting factor for further price declines, but on the other hand, a real turnaround should be supported by a significant change in the market environment. But gas stocks have reached record highs in the European Union and further LNG supplies are on the way, making price increases rather unlikely. In Germany, industrial production contracted for the fourth consecutive month, which also clouds the outlook for electricity prices. As long as these factors remain influential, the prospects of a breakout of the EUA’s downtrend channel appear rather slim.

(Average Quotes Exchange / OTC)
Instrument	03/11/23	10/11/23	Change
EUA (December-2023-Future)	77.64 EUR	78.70 EUR	+1.06 EUR
VER (Natural Carbon Offsets)	1.06 USD	0.86 USD	-0.20 USD
VER (CORSIA eligible Carbon Offsets)	0.59 USD	0.56 USD	-0.03 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	85.02 USD	81.55 USD	-3.47 USD
EURO (Currency, Forex)	1.0729 USD	1.0684 USD	-0.0045 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. 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 Madam or Sir,

The Carbon Border Adjustment Mechanism (CBAM), is an important instrument of the European Union for pricing greenhouse gas emissions that occur outside the EU and are subject to little or no pricing there.

From January 1, 2024, imported products made from iron, steel, aluminium, iron ore, hydrogen, electricity, cement, ammonia, potassium nitrate and fertilizers will be recorded and reported.

If there is a price for CO2 or its equivalents in the country of origin, these must also be stated. The carbon border adjustment system is part of the “Fit for 55” package. The aim of the system is to price the emissions associated with the production of imported goods in the same way as they do for production within the EU.

To do this, the person who imports goods must, in the next step, purchase so-called CBAM certificates, whereby one CBAM certificate corresponds to the emissions of one ton of CO2. The price of the CBAM certificates based on the price of the EU emissions allowances (EUA).

CBAM applicants must purchase most CBAM certificates in the year of import, but no later than at the end of the quarter after importing goods, and hold 80% of the certificates. Up to a third of excess certificates purchased can be sold back to the EU member states.

The plan is for a gradual introduction between 2026 and 2034, with a parallel gradual “phasing out” of free certificates.

Deliveries of goods up to EUR 150 are exempt from the reporting requirement. However, a corresponding number of intentional and unintentional violations can be assumed.

The CBAM certificates will be sold to approved applicants at the price of an EU ETS certificate (EUA) via a common central platform set up and managed by the EU Commission. It is currently unclear to what extent intermediaries or other service providers can provide support to the companies affected.

The price of the EU emissions allowances underlying the CBAM has been in a sideways-downward channel since mid-March and last week this was broken downwards, and the EUA even ended the trading week below the channel.

If the EUAs do not manage to sustainably return to this trend channel, it cannot be ruled out that prices could move towards 73 euros. Should the bullish sentiment return, the next resistance would be the 38-day line, which is currently at 82.79 euros, followed by the 200-day line, which is currently at 86.54 euros.

Companies obliged to participate in German national emissions trading system should now make relatively valid calculations for their need for national emissions certificates (nEZ) for the current year, as 2023 certificates will only be available indefinitely for the next five weeks. The last auction with a fixed price of 30 euros will take place on December 7, 2023. After that, only an additional purchase option of 10% is possible; from next year the nEZ will cost 10 euros or 33% more, i.e. 40 euros per nEZ.

(Average Quotes Exchange / OTC)
Instrument	27/10/23	03/11/23	Change
EUA (December-2023-Future)	79.35 EUR	77.64 EUR	-1.71 EUR
VER (Natural Carbon Offsets)	1.41 USD	1.06 USD	-0.35 USD
VER (CORSIA eligible Carbon Offsets)	0.65 USD	0.59 USD	-0.06 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	88.79 USD	85.02 USD	-3.77 USD
EURO (Currency, Forex)	1.0578 USD	1.0729 USD	+0.0151 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. 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