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

Headquarter: Geldern (Germany) | Local Court Kleve HRB 12470 | VAT.-ID:   DE292139472

This email and any attachments are confidential and may also be privileged. If you are not the named recipient, please notify the sender immediately and do not disclose the contents to another person, use it for any purpose, or store or copy the information in any medium. In the event of any technical difficulty with this email, please contact the sender.

Please consider environment before printing this email and safe on every page 200 ml drinkable water, two gram CO² and two gram wood.

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

Emissions Trading / Carbon Market News (27/05/2024)

Ladies and Gentlemen,

Carbon pricing instruments currently cover around a quarter of global greenhouse gas emissions. There are currently 75 carbon taxes and emissions trading systems worldwide, and the trend is rising.

According to a report by the World Bank, revenue from carbon pricing reached record levels last year, exceeding the USD 100 billion mark for the first time. More than half of the funds flowed directly into climate and nature conservation programmes.

In our view, the introduction of the European Union’s Carbon Border Adjustment Mechanism (CBAM) will also lead to the introduction of carbon trading systems in other countries, which will have a stronger local steering effect so that the funds generated in this way can be used in the respective country and not channelled into the revenues of the EU Emissions Trading Scheme.

In the last trading week, the price of carbon emission allowances in EU Emissions Trading System rose by almost five euros or nearly seven per cent. The price has left important resistance at just under EUR 74 behind and has established itself above the 200-day-line, which is currently at EUR 72.40. If nothing fundamentally bearish happens and there is no major profit-taking, there is much to suggest that the price will remain above the 200-day line this week and not leave the upward trend channel. This could even lead to a test of the EUR 80 mark in the benchmark December 24 contract.

There will be no auction on the Leipzig EEX today (Monday) due to the Spring Bank Holiday and the Polish auction will also not take place on Wednesday as scheduled. As a result, only a total of 7,995,000 EUAs will be auctioned this week, which corresponds to just around 60% of the previous week’s auction volume.

    (Average Quotes Exchange / OTC)       
Instrument17/05/2424/05/24Change
EUA (December-2024-Future)70.69 EUR75.61 EUR+4.92 EUR
VER (Natural Carbon Offsets)1.09 USD1.02 USD-0.07 USD
VER (CORSIA eligible Carbon Offsets)0.42 USD0.40 USD-0.02 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)84.30 USD82.33 USD-1.97 USD
EURO (Currency, Forex)1.0868 USD1.0847 USD-0.0021 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 (21/05/2024)

Dear Sir or Madam,

The Mercator Research Institute on Global Commons and Climate Change (MCC), headed by Professor Ottmar Edenhofer, has analysed in a global meta-study how strong the influence of carbon pricing is on the decline in greenhouse gas emissions. From almost 17,000 relevant studies, 80 seriously relevant studies were identified and analysed with the help of neural computer technology.

The conclusion is that a reduction in emissions of between 5 and 21 per cent was already achieved in the first few years after the start of pricing, depending on the control effect and the level of pricing.

As the building and transport sectors in particular cause high CO2 emissions, consideration is already being given at EU level to whether the EU ETS2, which prices these sectors across the EU, could be launched earlier rather than in 2027.

However, in order to provide affected companies with a form of price hedging now, regardless of the start of EU ETS2, scientists and analysts recommend building up a carbon portfolio with certificates in EU ETS1 and investing in EUAs now.

We would be happy to advise you on these matters and manage your optimal procurement strategy.

Last week, EU emission allowances recorded a loss of just over one euro on a weekly closing price basis. EUAs tended to move sideways throughout the entire trading week, supported by the 38-day line.

Yesterday, Monday, however, the emission rights showed renewed strength and broke through two technical resistance levels as well as the 200-day-line, ending the first trading day of this week at EUR 74.22 in the benchmark contract.

If the bullish trend continues this week, the next technical resistances would be around EUR 80 and EUR 87, the 200-day-line would now be a support at the current EUR 72.68, followed by the 38-day-line at EUR 69.31, which should cross the 200-day line shortly.

“The trend is your friend”, as the saying goes among stockbrokers, and this currently appears to remain bullish after many months of politically favoured price declines.

    (Average Quotes Exchange / OTC)       
Instrument10/05/2417/05/24Change
EUA (December-2024-Future)71.91 EUR70.69 EUR-1.22 EUR
VER (Natural Carbon Offsets)1.01 USD1.09 USD+0.08 USD
VER (CORSIA eligible Carbon Offsets)0.44 USD0.42 USD-0.02 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)82.62 USD84.,30 USD+1.68 USD
EURO (Currency, Forex)1.0757 USD1.0765 USD+0.0008 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