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)       
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