Emissions Trading / Carbon Market News (23/06/2024)

Ladies and Gentlemen,

The building sector is responsible for around 40% of global CO2 emissions.

S&B Strategy, a Munich-based strategy consultancy specialising in the construction sector, has published a new study that focuses on the goal of climate neutrality in the building sector by 2050.

According to the analysts, there are two ways to reduce CO2 emissions in this segment. The first option is to manage buildings using purely renewable energy, while the second option aims to increase the efficiency of buildings and thus minimise energy loss.

Here, the specialists at S&B consider the heating, roof, facade and window systems to be the most effective for achieving measurable results. As Germany is pursuing both options, climate neutrality cannot be realised without comprehensive building renovations. The analyses show that this will require investments of at least 1,200 billion euros, which, however, are not the key success factor under the current framework conditions.

Due to the shortage of skilled workers and personnel, S&B considers it imperative to improve efficiency in the construction sector in order to significantly improve the performance of existing human resources through prefabrication and standardisation.

This will ultimately also reduce the rising cost of CO2 emission allowances for fossil fuels in the building sector, which will make a significant contribution to financing.

Despite several attempts, carbon emission allowances in EU Emissions Trading System have not realized to break through the 200-day line, which currently stands at EUR 70.56, on a daily closing price basis, which is why the benchmark December 2024 contract closed down a small 15 cents on a weekly basis at EUR 68.13 per tonne of CO2.

In the new trading week, 11,094,500 new EUAs will be auctioned on only four auction days, as the Polish auction will not take place on Wednesday as scheduled.

    (Average Quotes Exchange / OTC)       
Instrument14/06/2421/06/24Change
EUA (December-2024-Future)68.28 EUR68.13 EUR-0.15 EUR
VER (Natural Carbon Offsets)1.01 USD0.99 USD-0.02 USD
VER (CORSIA eligible Carbon Offsets)0.34 USD0.38 USD-0.04 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)82.60 USD85.18 USD+2.58 USD
EURO (Currency., Forex)1.0703 USD1.0691 USD-0.0012 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 (17/06/2024)

Ladies and gentlemen,

Companies that are subject to the European Emissions Trading System (EU ETS) will be confronted with stricter conditions in the coming years. Both for existing installations and for companies that were/will be commissioned after 1 January 2023 or will be subject to the EU ETS 1 regulations from 1 January 2024 as a result of the amendment to the Emissions Trading Directive, the free allocations will be significantly reduced. New applications therefore had to be submitted for the so-called 2nd allocation period (2026-2030) within the fourth trading period. The German Emissions Trading Authority (DEHSt) would like to point out that the application deadline for all companies subject to emissions trading ends uniformly on Friday, 21 June 2024. Detailed information and explanations on the allocation rules and the application process can be found on the DEHSt website and in the relevant DEHSt guidelines.

On Monday of the last trading week, the carbon price initially fell to a daily low of slightly over 69 euro, its lowest level in almost a month. This drop is partly due to the results of the European elections, in which parties with less ambitious climate policy goals were able to make gains. The new formation of the European Parliament is expected to influence future climate and energy policy. Somewhat surprisingly, however, buying interest increased again in the afternoon, with the December contract closing at EUR 70.91.

The bulls then dominated the market until Thursday and the price tested the 72 euro mark several times until the bears took over again in the last few trading hours and the price fell back to the 70.50-euro range. Obviously, the financially strong players do not currently trust the CO2 certificate to jump above the 80-euro mark. The next Commitment of Traders report, which will be published on 19 June, is therefore eagerly awaited. The CoT report regularly analyses the trading activities of the major market participants, who generally have the most comprehensive market information, so that conclusions can be drawn about possible market movements from their actions.

On Friday of the past trading week, the downward trend from Thursday continued consistently and drove the price down to a six-week low and thus below the relevant support lines, which suggests that the negative trend will continue in the new trading week. This is all the more true as DEHSt has announced that the free allocation for the year 2024 will take place in June.

    (Average Quotes Exchange / OTC)       
Instrument07/06/2414/06/24Change
EUA (December-2024-Future)71.39 EUR68.28 EUR-3.11 EUR
VER (Natural Carbon Offsets)1.03 USD1.01 USD-0.02 USD
VER (CORSIA eligible Carbon Offsets)0.37 USD0.34 USD-0.03 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)79.74 USD82.60 USD+2.86 USD
EURO (Currency., Forex)1.0817 USD1.0703 USD-0.0114 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 (10/06/2024)

Ladies and gentlemen,

Europe has voted and the feared lurch to the right has come true. But what impact will this have on the European Green Deal and the necessary decarbonisation of EU member states by the middle of this century?

In the elections five years ago, the climate crisis was taken seriously politically and climate protection was an important part of the election programme of all democratic parties in Europe. The “Fit-for-55” programme, which builds on the “Green Deal” and stands for a 55% reduction in greenhouse gases in the EU by 2030 compared to 1990, is an important milestone and carbon emissions trading is one of the core elements.

The conservative camps have already announced the end of the combustion engine phase-out, but this is not a serious problem with strong EU emissions trading prices, as CO2 pricing automatically has the same steering effect. In addition, many car manufacturers themselves have already announced an end to production, as combustion engines are highly inefficient.

The EU Parliament must now decide in the near future how it wants to deal with the expansion of renewable energies and still existing subsidies for fossil fuels. The European energy network must also be improved.

The European market for carbon emission allowances reflected such uncertainties last week and the price fell for the second week in a row.

With a closing price of EUR 71.39 for the EUA December 2024 contract, the price has not only visibly left the upward trend channel, but has also dipped below the important 200-day-line, although this acted as good support for a long time last week. This means that the 200-day-line at 71.50 is now a serious resistance level, as is the 38-day-line at 73.18. After the EUR 70 mark, the next support level is around EUR 66.50, followed by the EUR 60 area.

Depending on how the market behaves due to the outcome of the European elections, this could be a good price to stock up on some of the remaining demand needed to fulfil the compliance obligations of plant operators, as the deadline at the end of September is coming sooner than some market participants might think and in August we will have the halved auction volume again, which naturally affects the supply/demand ratio accordingly.

In the new trading week, the high auction volume of 13,404,500 EUAs could also have a bearish effect, as could the rather moderate temperatures in Europe, which require neither heating energy nor particularly large amounts of electricity for air conditioning systems.

    (Average Quotes Exchange / OTC)       
Instrument31/05/2407/06/24Change
EUA (December-2024-Future)74.10 EUR71.39 EUR-2.71 EUR
VER (Natural Carbon Offsets)1.04 USD1.03 USD-0.01 USD
VER (CORSIA eligible Carbon Offsets)0.41 USD0.37 USD-0.04 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)81.65 USD79.74 USD-1.91 USD
EURO (Currency, Forex)1.0833 USD1.0817 USD-0.0016 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

ADVANTAG Services GmbH | Glockengasse 5 | 47608 Geldern | Tel.: +49(0)2831.1348220 | Fax: +49(0)2831.1348221 | E-Mail: info@advantag.de | Web:  www.advantag.de

Managing Director Raik Oliver Heinzelmann

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Emissions Trading / Carbon Market News (03/06/2024)

Ladies and Gentlemen,

Last week, the German Federal Cabinet launched the controversial Carbon Storage Act and presented a corresponding draft bill.

By capturing CO2 in industrial processes and storing the greenhouse gas (CCS – Carbon Capture and Storage), greenhouse gas emissions in difficult and energy-intensive industrial sectors such as the cement and steel industries in particular are to be neutralised.

Environmental organisations warn of massive dangers for the ecosystem there, particularly in the case of storage in the North Sea.

In addition, the capture of CO2 with subsequent utilisation (CCU – Carbon Capture and Utilisation) is to be made possible.

It is still unclear how the project will be financed and whether it will pay for itself through the cost savings on CO2 certificates alone.

Over the past week, prices for emission allowances in the mandatory EU Emissions Trading Scheme have moved sideways in a relatively narrow range for the market between €72.95 and €76.25. They maintained a comfortable distance above the 38- and 200-day lines, which crossed last week as expected.

This means that the EUA are still in an upward trend channel and above an important support level of around €74.

Following the relatively low auction volume of just under eight million EUA in the previous week, the EEX will auction 13,404,500 EUA on all five trading days in the first week of June.

    (Average Quotes Exchange / OTC)       
Instrument24/05/2431/05/24Change
EUA (December-2024-Future)75.61 EUR74.10 EUR-1.51 EUR
VER (Natural Carbon Offsets)1.02 USD1.04 USD+0.02 USD
VER (CORSIA eligible Carbon Offsets)0.40 USD0.41 USD+0.01 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)82.33 USD81.65 USD-0.68 USD
EURO (Currency, Forex)1.0847 USD1.0833 USD-0.0014 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