Emissions Trading / Carbon Market News (28/10/2024)

Dear Sir or Madam,

The prices in the European Emissions Trading System EU ETS show the current price for the emission of one tonne of CO2 or its equivalent (CO2e) in the sectors currently priced by the EU, but what happens to the revenues generated by the European primary market auctions on the European Energy Exchange EEX?

Among other things, the European Union is supporting 85 innovative ‘net-zero projects’ with a total of 4.8 billion euros. These projects receive funding from the so-called innovation fund and are intended to develop climate-friendly technologies and make them usable, which should contribute to the decarbonisation of Europe.

These projects are located in 18 countries and are to be implemented by 2030, saving 476 million tonnes of CO2e in the first 10 years. They are in areas such as renewable energies, energy storage and mobility.

Last week, prices in the EU ETS recovered significantly compared to the previous week. After Monday was still bearish, the price rose to the 200-day line, particularly on Wednesday, and on Thursday this resistance and the 38-day line were also easily overcome.

After the 60-euro mark proved stable at the beginning of October and prices moved well away from it, some market participants closed their short positions and this short covering supported the 7.5% price increase on a weekly closing price basis.

However, since nothing has changed fundamentally, it is relatively likely that the market will calm down again in the coming week and tend more towards the 200-day line, which is currently at 64.91. It remains to be seen how strong it will prove to be as possible support.

After the 14,582,500 EUAs auctioned on the EEX last week, only 11,749,000 EUAs will be auctioned over four trading days in the new trading week, as the Polish auction is not scheduled to take place on Wednesday.

    (Average Quotes Exchange / OTC)       
Instrument18/10/2425/10/24Change
EUA (December-2024-Future)62.28 EUR66.97 EUR+4.69  EUR
VER (Natural Carbon Offsets)0.34 USD0.51 USD+0.17 USD
VER (CORSIA eligible Carbon Offsets)0.42 USD0.43 USD+0.01 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)73.46 USD76.05 USD+2.59 USD
EURO (Currency.. Forex)1.0866 USD1.0795 USD-0.0071 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,

Your Advantag – Team

Emissions Trading / Carbon Market News (21/10/2024)

Dear Sir or Madam,

In January of this year, the Carbon Border Adjustment Mechanism (CBAM) began and importers of goods such as aluminium, iron, steel, cement, fertilisers, hydrogen or electricity, as well as their primary products, into the European Union are obliged to provide quarterly information on the related greenhouse gas emissions to the European Commission.

From January of next year, the companies concerned will be subject to additional registration requirements. Should obligated companies fail to comply with this requirement, they risk no longer being able to import goods into the EU.

It will become financially significant from January 2026, when importers will have to participate in the EU Emissions Trading System (EU ETS) and purchase emission rights for their imports.

However, the North Rhine-Westphalian Ministry of Economic Affairs, headed by Minister of Economic Affairs Mona Neubaur, does not yet consider the current regulations to be sufficient and points out some design flaws. For example, the ministry considers the administrative burden on companies to be too high, which affected companies certainly see it the same way.

Furthermore, there is no compensation for European exporters who participate in the EU ETS and purchase rights for their emissions, but have to compete on the global market with companies that are not subject to any or much lower carbon pricing.

For example, an EU emission allowance for one tonne of CO2 currently costs more than 62 euros, whereas in China it costs just over 13 euros. In China, only the energy industry is required to pay the levy, but this is set to change soon.

Furthermore, German North Rhine-Westphalia is calling on the EU to extend the levy to goods containing iron, steel or aluminium, such as brake discs, grills, washing machines and cars.

Last week, prices for EU emission rights were 3.6% lower than in the previous week. A sustained break-through attempt above the 200-day moving average, which is currently at 64.95, failed on Wednesday.

One bearish factor was oil, which saw a price slump last week, coinciding with news that Israel would probably not attack Iranian oil refineries and storage facilities after all, causing Brent crude to slump by 7.5% on a weekly closing price basis.

This week, 14,582,500 EUA will be auctioned on the European Energy Exchange on all five trading days, which corresponds to an increase of 13.8 per cent compared to the previous week.

    (Average Quotes Exchange / OTC)       
Instrument11/10/2418/10/24Change
EUA (December-2024-Future)64.62 EUR62.28 EUR-2.34 EUR
VER (Natural Carbon Offsets)0.33 USD0.34 USD+0.01 USD
VER (CORSIA eligible Carbon Offsets)0.43 USD0.42 USD-0.01 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)79.38 USD73.46 USD-5.92 USD
EURO (Currency.. Forex)1.0931 USD1.0866 USD-0.0065 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,

Your Advantag – Team

Emissions Trading / Carbon Marke News (14/10/2024)

Dear Sir or Madam,

After more than 140 years, the United Kingdom has become the first European industrialised country and the first G7 country to phase out the generation of electricity from coal, which is particularly harmful to the climate. On 30 September 2024, the last coal-fired power plant in Ratcliffe-on-Soar was shut down.

This was possible specifically because the UK continues to use nuclear power as a bridging technology.

And France, too, emitted about 3.6% fewer greenhouse gases in the first half of 2024, partly due to the expansion of renewable energies and the optimisation of nuclear energy use.

But more and more energy-intensive technology companies such as Microsoft, Google and Amazon are also increasingly relying on nuclear power to meet the ever-growing energy needs of their data centres and thus achieve their own emissions reduction targets. In particular, artificial intelligence and cloud computing have significantly increased the demand for electricity in this industry.

However, Germany also emitted around 40 million tonnes less CO2 in the energy sector in the first half of the year, due to both the expansion of renewable energies and the looming recession.

And it is precisely these developments that have led to the fact that in the past few months, rather bullish tendencies have been seen in the market for CO2 emission rights in the EU ETS since the highs in the triple digits in spring 2023.

However, in the past trading week, the 60-euro mark proved stable and although the price was briefly below 60 on Wednesday, a small rally set in, which ended on Thursday in the area of the 200-day line. On a weekly closing price basis, this resulted in a gain of just over 4%.

Should there be no further fundamental impulses, the market should move in the new trading week in the area of 60 euros and the 200-day line, which currently stands at 65.19.

This week, a total of 12,810,000 EUA will be auctioned on the EEX on all five trading days, which corresponds to a decrease of 12.15% compared to the previous week.

    (Average Quotes Exchange / OTC)       
Instrument04/10/2411/10/24Change
EUA (December-2024-Future)62.05 EUR64.62 EUR+2.57 EUR
VER (Natural Carbon Offsets)0.33 USD0.33 USD+0.00 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)78.74 USD79.38 USD+0.64 USD
EURO (Currency.. Forex)1.0965 USD1.0931 USD-0.0034 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,

Your Advantag – Team

Emissions Trading / Carbon Market News (07/10/2024)

Dear Sir or Madam,

The Austrian National Bank (Oesterreichische Nationalbank) has used a simulation model to examine the effects of carbon prices on gross domestic product (GDP) growth in the European Union and has also determined what the price of emission rights would have to be to avoid further measures to achieve the EU’s ‘Fit-for-55’ target.

Based on the current price, further measures such as the introduction of higher energy efficiency standards would have to be implemented to achieve the EU’s self-imposed climate targets. However, to avoid further measures altogether, the price of CO2 emissions would have to rise to EUR 668.00 per tonne of CO2 or its equivalent of other greenhouse gases (CO2e) by 2030.

According to the Oesterreichische Nationalbank, such a high price would result in the gross domestic product (GDP) in the euro area in 2030 being 2.2% lower than it would have been without a high carbon price, while consumer prices would be 6.4% higher. However, economists consider these effects to be negligible because they would be spread over a period of six years.

We are currently well away from prices above the 600-euro mark in the EU ETS; the prices for EU emission rights are currently around a tenth of that. After a weekly gain of 4.6 per cent in the previous week, EUA fell by 6.5 per cent this week, despite the significant rise in oil prices due to the escalation in the Middle East. With a low of 61.41 last Friday, a six-month low was also reached.

This week, a total of 14,582,500 EUA will be auctioned on all five trading days at the Leipzig EEX, which corresponds to an increase of 15% compared to the previous week.

    (Average Quotes Exchange / OTC)       
Instrument27/09/2404/10/24Change
EUA (December-2024-Future)66.33 EUR62.05 EUR-4.28 EUR
VER (Natural Carbon Offsets)0.33 USD0.33 USD+0.00 USD
VER (CORSIA eligible Carbon Offsets)0.37 USD0.38 USD+0.01 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)71.99 USD78.74 USD+6.75 USD
EURO (Currency.. Forex)1.1166 USD1.0965 USD+0.0201 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,

Your Advantag – Team