Emissions Trading / Carbon Market News (19/02/2024)

Dear Madam or Sir,

Last week, the EU decided to support CO2-intensive industry, which is subject to levies in EU emissions trading EU ETS, with a total of four billion euros to reduce 60% of its carbon emissions within three years and 90% within 15 years. 

In addition, the German Federal Ministry of Economics has announced that Germany intends to have the EU emission allowances that are no longer needed due to the coal phase-out cancelled and therefore not transferred to the Market Stability Reserve (MSR). This would possibly have happened indirectly anyway, as the MSR will retire all allowances above its maximum quantity of 400 million EUAs from this year onwards. The exact amount is not yet known.

EU emission allowances have lost almost 30% since the beginning of this year, carbon credits used for the international aviation industry (CORSIA) have gained 29% after months of decline and voluntary carbon credits based on nature projects also appear to have bottomed out with an increase of 65%.

According to various analysts, the prices of voluntary emissions trading certificates will rise by several hundred and even thousand per cent in the coming years, which is why many funds and investors are already beginning to discover this asset class for themselves. However, good advice on which types of certificates could be among the most promising is essential here.

At the end of the week, EU emission allowances were relatively stable compared to previous weeks, falling by only 2.8%. The trading range of the December 2024 EUA futures was not particularly volatile either, with prices ranging between 55.41 and 59.05 Euro.

From a technical point of view, it would now be logical for the EUA to tackle the path above the EUR 60 mark this week, but in the absence of bullish impetus, a further decline could also be possible; after all, the delivery deadline has now been moved from the end of April to the end of September, which makes the usual bullish phase in the first quarter obsolete due to higher demand.

    (Average Quotes Exchange / OTC)       
Instrument09/02/2416/02/24Change
EUA (December-2024-Future)58.79 EUR57.17 EUR-1.62 EUR
VER (Natural Carbon Offsets)1.42 USD1.50 USD+0.08 USD
VER (CORSIA eligible Carbon Offsets)0.78 USD0.76 USD-0.02 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)81.67 USD82.75 USD+1.08 USD
EURO (Currency, Forex)1.0782 USD1.0775 USD-0.0007 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

Emissions Trading / Carbon Market News (12/02/2024)

Dear Sir or Madam

According to a survey conducted by the “Ludwig Erhard Ifo Centre for Social Market Economy” in Fuerth/Germany, 55 per cent of the Germans are in favour of Germany playing a pioneering role in climate protection, while a third are against it.

In order to achieve climate neutrality in Germany by 2045, 28% of respondents are in favour of subsidies, such as the promotion of electromobility. 16% are in favour of climate-friendly standards and bans on climate-damaging measures and just 8% are in favour of higher prices for CO2 emissions, although emissions trading in particular is the cheapest market-based instrument.

For this reason, the climate money needs to be introduced as soon as possible and not in 2026, as German Finance Minister Christian Lindner told newspaper “Welt am Sonntag” at the beginning of February.

The price of European carbon emission allowances only remained above the EUR 60 mark last week after breaking through a sideways-upward support line on Thursday, but this support also failed to hold on Friday. On a weekly closing price basis, EUAs lost a whopping 7.3%.

Technically, there is further support in the EUR 56.90 area, but sentiment is currently so negative that a new price slide is also possible.

The 200-day line is significantly higher at EUR 82.56 and even the 38-day line at EUR 70.23 is a long way from the current oversold price of just under EUR 59 in the December benchmark future.

The demand for the EEX auctions this week could be an indicator of whether price-conscious investors and speculators are now making more purchases again, which would also help the price out of the cellar.

    (Average Quotes Exchange / OTC)       
Instrument02/02/2409/02/24Change
EUA (December-2024-Future)63.40 EUR58.79 EUR-4.61 EUR
VER (Natural Carbon Offsets)1.59 USD1.42 USD-0.17 USD
VER (CORSIA eligible Carbon Offsets)0.88 USD0.78 USD-0.10 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)77.40 USD81.67 USD+4.27 USD
EURO (Currency, Forex)1.0788 USD1.0782 USD-0.0006 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

Emissions Trading / Carbon Market News (05/02/2024)

Dear Madam or Sir,

Last week, the European Commission initiated infringement proceedings against Germany and 25 other countries for failing to implement a directive on EU emissions trading (EU ETS).

This directive concerned, among other things, the creation of a social climate fund, the new EU emissions trading system for transport and buildings, which is due to start in 2027, and the extension of emissions trading to shipping.

The European Commission has also drawn up a draft climate target for 2040, which, according to the German Press Agency, envisages a 90% reduction in greenhouse gas emissions compared to 1990 and is to be presented this week.

The most important component here is the “Fit for 55” legislative package, which includes extensive measures for industry, the energy sector, the transport sector and agriculture. 

According to the draft, a reduction of 90 – 95% by 2040 is required in line with the recommendations of the Scientific Advisory Board in order to prevent key tipping points in the climate system and “potentially catastrophic impacts on human society and ecosystems” from being exceeded.

As the EU’s central market-based instrument is CO2 emissions trading, the draft is also likely to have an impact on the future design of emissions trading, such as the inclusion of additional sectors and the increase in the annual reduction factor of the emission allowances to be auctioned.

Last week, prices in EU emissions trading fluctuated within a relatively moderate range between EUR 61.23 and EUR 65.16 in the EUA December 2024 benchmark contract.

As the Polish auction will not take place on Wednesday, a total of 11,094,500 EUAs will be auctioned on the other trading days.

    (Average Quotes Exchange / OTC)       
Instrument26/01/2402/02/24Change
EUA (December-2024-Future)63.58 EUR63.40 EUR-0.18 EUR
VER (Natural Carbon Offsets)1.33 USD1.59 USD+0.26 USD
VER (CORSIA eligible Carbon Offsets)0.77 USD0.88 USD+0.11 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)83.15 USD77.40 USD-5.75 USD
EURO (Currency, Forex)1.0848 USD1.0788 USD-0.0060 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