Emissions Trading / Carbon Market News (15/07/2024)

Dear Sir or Madam,

In a recent study, the University of Hamburg (UHH) has analysed the indirect effects of the EU Emissions Trading System on hazardous air pollutants. The findings of the Cluster of Excellence “Climate, Climatic Change and Society” (CLICCS) show that the European Emissions Trading System has both climatic and significant health benefits, while also saving billions in costs.

Since the introduction of emissions trading, 15 million tonnes of sulphur dioxide, one million tonnes of particulate matter and five million tonnes of nitrogen oxides have been reduced in the obligated sectors by 2021. The improved health situation creates an important additional incentive to support climate policy, as the University of Hamburg was able to show avoided health damage totalling more than 100 billion euros on the basis of official cost rates from the German Federal Environment Agency.

Prices in EU emissions trading moved sideways downwards again in the past trading week and closed exactly one cent below the 200-day line on Friday, which stands at EUR 69.20.

It will be interesting to see in the coming weeks when compliance buyers in the EU ETS will start to procure the volumes they have not yet purchased for 2023 on the market.

This week, a total of 13,404,500 EUAs will be auctioned on the EEX on all five trading days and it remains to be seen whether the price will manage to break through the 100-day line on a sustained basis.

    (Average Quotes Exchange / OTC)       
Instrument05/07/2412/07/24Change
EUA (December-2024-Future)70.36 EUR69.19 EUR-1.17 EUR
VER (Natural Carbon Offsets)1.01 USD1.03 USD+0.02 USD
VER (CORSIA eligible Carbon Offsets)0.21 USD0.24 USD+0.03 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)86.90 USD85.44 USD-1.46 USD
EURO (Currency.. Forex)1.0839 USD1.0912 USD+0.0073 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 (08/07/2024)

Dear Sir or Madam,

The effectiveness of EU emissions trading is repeatedly the subject of controversial debate. A current study now shows what the introduction of certificates since 2005 has achieved in various areas.

According to researchers from the Cluster of Excellence Climate, Climatic Change, and Society at the University of Hamburg, climate protection in the European Union has also directly benefited health. For example, emissions trading and the simultaneous tightening of air pollution control standards for large combustion plants in the EU have led to a drop in sulphur dioxide (by 39 per cent), particulate matter (by 28 per cent) and nitrogen oxides (by 14 per cent) in the air between 2005 and 2021.

The study thus shows that EU emissions trading is not only an effective instrument for reducing carbon emissions, but also offers significant additional benefits through the reduction of air pollutants. “The estimated health benefits could be equivalent to hundreds of billions of euros, even when the effects of simultaneously improved emission standards are taken into account,” explain the researchers.

A comprehensive policy assessment should therefore also take into account the additional benefits that go beyond CO2 reduction, such as reduced health damage from improved air quality. Communicating these benefits could help to increase public support for climate policy measures, as these additional benefits directly affect citizens and can be realised within Europe.

The past trading week began rather cautiously for the carbon market, which initially depressed prices. On Tuesday, however, the buy side took the initiative and invested a lot of money. As a result, the carbon price initially broke through the 70 euro mark without resistance and briefly rose to the 72 euro line on Wednesday. However, the publication of the Commitments of Traders Report (CoT Report) caused speculators to switch back to the more pessimistic side. The net short position rose again, whereupon the market followed the investment funds and finally levelled out in a range between 70 and 71 euros.

Thursday was an exciting day for the market as elections were held in the UK. The long-standing Conservative Tory government was voted out in a landslide, and the Labour government under Prime Minister Keir Starmer is now in power. The new British Foreign Secretary David Lammy has already spoken of a new beginning in relations with Europe. While the Conservatives have weakened climate protection in recent years, Labour stands for a more consistent climate protection policy. In the UK, developments on this issue therefore appear to be moving in a different direction to those within the EU.

The carbon market initially reacted very positively to the elections and pushed the price back above the EUR 71 mark, but then consolidated lower and closed at EUR 70.36 for the December future.

    (Average Quotes Exchange / OTC)       
Instrument28/06/2405/07/24Change
EUA (December-2024-Future)67.47 EUR70.36 EUR+2.89 EUR
VER (Natural Carbon Offsets)1.01 USD1.01 USD+0.00 USD
VER (CORSIA eligible Carbon Offsets)0.43 USD0.21 USD-0.22 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)85.69 USD86.90 USD+1.21 USD
EURO (Currency.. Forex)1.0707 USD1.0839 USD+0.0132 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 (01/07/2024)

Dear Sir or Madam,

Every week, several million EU emission allowances are auctioned on the Leipzig EEX, but what are these revenues used for?

Last Friday, the EU paid out a total of almost 3 billion of these via the modernisation fund to support 39 energy projects. These are intended for the reduction of greenhouse gas emissions in the agriculture, industry, transport and energy sectors, such as the expansion of renewable energies.

The modernisation fund particularly supports EU member states with a lower gross national product that are currently still heavily dependent on coal and helps them to carry out investments in line with the REPowerEU plan and the “Fit for 55” package.

However, revenues from the auctioning of carbon emission allowances will be lower if prices fall, which is naturally the case when demand is lower.

Last week, prices remained under pressure and moved in a range of €65.78 to €69.09, visibly below the 200-day line, which currently stands at just over €70.

In addition to the suboptimal economic development, particularly in Germany, the lower demand is also due to the expansion of renewable energies, which, according to analysts at London-based Energy Aspects, has already led to a year-on-year decline of 43 million tonnes of CO2 in the first half of the year. They expect a further decrease of 14 million tonnes in the third quarter of 2024.

However, as the deadline for submitting emission allowances for the previous year was changed from the end of April to the end of September for the first time this year, demand could pick up again in the coming months, which should also be helped by the halving of the auction volume in August. 

Insofar as the price of EUAs continues to move in the downward trend channel that began at the start of last month, prices below the EUR 65 mark would also be possible and this would appear to be a good opportunity for buyers to stock up on at least some of their open demand.

    (Average Quotes Exchange / OTC)       
Instrument21/06/2428/06/24Change
EUA (December-2024-Future)68.13 EUR67.47 EUR-0.66 EUR
VER (Natural Carbon Offsets)0.99 USD1.01 USD+0.02 USD
VER (CORSIA eligible Carbon Offsets)0.38 USD0.43 USD+0.05 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)85.18 USD85.69 USD+0.51 USD
EURO (Currency., Forex)1.0691 USD1.0707 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