Emissions Trading / Carbon Market News (05/12/2022)

Dear Madam or Sir,

The German auctions within the framework of EU emissions trading system will also be held at EEX in the next three years with an option to extend by a further two years, as the energy exchange from Leipzig has published.

From 2010 onwards, more than 1.5 billion carbon emission allowances for Germany alone were auctioned at the EEX with total proceeds of more than 26 billion euros, almost all of which was used to finance German and international climate protection projects. In 2021 alone, EEX auctioned 587 million emission allowances for the EU member states.

Last Tuesday, the EU Parliament, the European Commission and the Presidency of the EU Council of Ministers, which is currently represented by the Czech Republic, were able to reach a preliminary agreement on the conditions for including maritime transport in European emissions trading system. Shipping is to be included in EU emissions trading from the year after next.

50% of the emissions from maritime journeys to and from European ports, including those from third countries, are now subject to carbon pricing from 2024. From January 2024 onwards, ship operators are obliged to purchase pollution permits for 40% of their emissions. From 2025 this share will increase to 70% and from 2026 carbon emission certificates will have to be purchased for all emissions.

While this deal was to be expected, the already bullish sentiment in the European carbon market was further boosted and emission allowances are up a strong 11% over the past week of trading, easily breaking through any technical resistances.

Should the chart technique play a role in the new trading week, a good support line can be found in the area around EUR 83.50 and stronger resistance in the region around EUR 93.30. The price is currently in between, but profit-taking could be a realistic scenario.

This week, a total of 12.5 million EUAs will be offered on all five trading days at EEX, in the coming week 9.4 million and the last auction this year will take place on December 19, 2022 in Leipzig, in which 2,568,500 EUAs will be offered.

The last two auctions for Germany’s national emission allowances will also take place this week on Tuesday and Thursday; If you still want to take part in these, you should act promptly and get in touch with our carbon trading desk.

  (Average Quotes Exchange / OTC)   
Instrument25/11/2202/12/22Change
EUA (Spot-Market)78.78 EUR87.58 EUR+8.80 EUR
EUA (December-2022-Future)78.86 EUR87.67 EUR+8.81 EUR
VCU (Voluntary Carbon Units ø)5.43 USD5.33 USD-0.10 USD
VER (Gold Standard Spotmarkt ø)3.15 USD2.97 USD-0.18 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)83.81 USD85.84 USD+2.03 USD
EURO (Currency, Forex)1.0395 USD1.0539 USD+0.0144 USD

(The average exchange quotes and OTC-prices shows the average between bids and ask of several exchanges and OTC markets for carbon emission rights in the ETS. Bid and ask has usually in Spot Market a visible spread. The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. 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 (28/11/2022)

Dear Madam or Sir,

The price of oil has come under massive pressure in the past few days, and at the same time the euro has visibly strengthened against the US dollar. This pleases consumers who heat with oil or drive vehicles powered by fossil fuels.

The reasons for this include high corona numbers in China and the ongoing zero-Covid strategy in China, which is leading to a large number of lockdowns. More than 410 million Chinese are currently affected by the lockdown, which corresponds to around a third of the population and a decline in Chinese economic output by a fifth. Not only does the manufacturing industry in the Far East suffer from this, but also the economy in all other parts of the world afterwards, as delivery bottlenecks are likely to increase again.

According to forecasts by the International Energy Agency IEA, demand for oil is even expected to fall from 2.1 million barrels a day to 1.6 million barrels a day in the coming year, which means a drop of 24%.

Despite this significant decline and the associated reduction in greenhouse gas emissions, European carbon emission allowances have been clearly bullish over the past week. EUAs gained 9% on a weekly closing basis and closed just below the EUR 79 mark.

In the coming trading week, with the exception of Wednesday, a total of 9,393,000 EUAs will be auctioned at the EEX.

In addition, it is now the penultimate week in which emission certificates in accordance with the German Fuel Emissions Trading Act can be obtained in Germany’s national emissions trading system.

We therefore ask our customers to calculate their needs promptly and to send us their purchase orders in order to be able to participate in the last four remaining fixed-price auctions this year at EEX Leipzig.

  (Average Quotes Exchange / OTC)   
Instrument18/11/2225/11/22Change
EUA (Spot-Market)72.36 EUR78.78 EUR+6.42 EUR
EUA (December-2022-Future)72.38 EUR78.86 EUR+6.48 EUR
VCU (Voluntary Carbon Units ø)5.48 USD5.43 USD-0.05 USD
VER (Gold Standard Spotmarkt ø)3.18 USD3.15 USD-0.03 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)87.85 USD83.81 USD-4.04 USD
EURO (Currency, Forex)1.0322 USD1.0395 USD+0.0073 USD

(The average exchange quotes and OTC-prices shows the average between bids and ask of several exchanges and OTC markets for carbon emission rights in the ETS. Bid and ask has usually in Spot Market a visible spread. The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. 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 (21/11/2022)

Dear Madam or Sir,

Yesterday, after tough negotiations, the UN Climate Change Conference in Sharm el-Sheikh ended. The media had extensive coverage, which is highly appropriate when representatives of around 200 countries are struggling to master what is probably the greatest challenge mankind has ever faced.

This year, too, the conference had to be extended. The dispute over “loss and damage”, i.e. financial compensation for climate damage, had brought the conference to the brink of failure. But in the end, the result can be classified as historically relevant. For the first time in history, the world community has agreed to approve a fund to deal with climate damage in developing countries, with the money to go primarily to particularly vulnerable countries. The first step, however, is to set up a commission for the establishment of the fund, which will consist of 10 representatives of the industrialised countries and 13 representatives of the developing countries. This commission is to draw up recommendations on the many detailed questions, which will then be discussed and – if possible – decided on at the next UN climate conference in Dubai at the end of 2023.

In the final document from Sharm el-Sheikh, the states are also called upon to improve their largely inadequate climate protection plans in order to close the remaining gap to the 1.5-degree limit. The basis for this is still the Glasgow Climate Pact from last year. In addition, developing countries are to be supported in their transformation to a climate-friendly and socially acceptable economy. A work programme is also to be developed for this purpose. Among other things, international financial institutions such as the World Bank are to be reformed so that they are more strongly oriented towards climate protection and climate financing. Private investments are also welcome.

Of course, the main conclusion of the conference is that there are still many unanswered questions, such as the binding phase-out of fossil fuels, and the sad truth that we are still far from being able to stop the climate crisis. But the fact that such a result has taken place at all against the backdrop of the current, extremely difficult geopolitical situation can certainly be seen as positive.

From Germany, it is worth reporting that electricity consumption has fallen significantly in recent months. According to the German Association of Energy and Water Industries (BDEW), 4 percent less electricity was consumed in September and as much as 9 percent less in October. This corresponds to the decline in the first year of the Corona pandemic 2020.

Oil prices also dropped significantly last week. A barrel of North Sea Brent fell below the $90 mark for the first time since October.

Against this background and in the absence of fundamental driving factors, European pollution rights also fell for the third week in a row. Only in the middle of the week was there an upward break. The price briefly broke through the 77-euro mark, but was unable to hold its ground there.

  (Average Quotes Exchange / OTC)   
Instrument11/11/2218/11/22Change
EUA (Spot-Market)75.81 EUR72.36 EUR-3.45 EUR
EUA (December-2022-Future)75.84 EUR72.38 EUR-3.46 EUR
VCU (Voluntary Carbon Units ø)5.48 USD5.48 USD+0.00 USD
VER (Gold Standard Spotmarkt ø)3.33 USD3.18 USD-0.15 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)95.92 USD87.85 USD-8.07 USD
EURO (Currency, Forex)1.0354 USD1.0322 USD-0.0032 USD

(The average exchange quotes and OTC-prices shows the average between bids and ask of several exchanges and OTC markets for carbon emission rights in the ETS. Bid and ask has usually in Spot Market a visible spread. The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. 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 (14/11/2022)

Dear Madam or Sir,

Yesterday was half-time at the 27th World Climate Conference in Sharm el-Sheikh. The first week focused on the topic of “Loss and Damage”, which is about financing poorer nations that are particularly affected by climate change.

An important means here should be carbon certificates, which the largest greenhouse gas emitters have to acquire and that income has to be distributed to the corresponding regions, because the financial damage to be quantified amounts to up to 580 billion US dollars annually until 2030 according to a study and should grow up to $1.7 trillion by 2050.

A total of 45,000 participants are expected in Egypt by the end of next week, among whom will be politicians and other state officials, non-governmental organizations but also 636 fossil fuel lobbyists, a quarter more than last year in Glasgow.

Also last week, the EU member states agreed that the sectors that are not yet subject to EU emissions trading must reduce their greenhouse gas emissions by 40% till 2030 compared to 2005, to keep the 1.5°C target of the Paris climate protection agreement still achievable for the EU.

Economically strong EU countries such as Germany have higher reduction targets of 50% than poorer countries such as Bulgaria, whose target is a 10% reduction. Failure to meet these targets will result in financial sanctions.

A so-called Effort Sharing Regulation (ESR) is intended to make greenhouse gas reductions mandatory for the EU member states and sets national targets for the sectors of agriculture, waste management, road traffic and buildings.

Germany is currently coordinating the measures to be taken by 2030 in the immediate climate protection program and has implemented the goals of the EU climate protection regulation in the national amended climate protection law, whereby the federal government has tightened the climate protection requirements accordingly and set the goal of greenhouse gas neutrality by 2045. By 2030, emissions are to be reduced by 65 percent compared to 1990.

Prices for European emission allowances (EUA) in the December-2022 benchmark futures contract have ranged between EUR 70.50 and EUR 79.50 over the past week, ending at 75.84. On a weekly closing basis, they lost EUR 0.52.

This week, 602,000 emission allowances for the aviation industry (EUAA) will be auctioned at the Leipzig EEX on Wednesday, and a total of 9,393,000 EUAs on the remaining trading days.

The last two auction dates for national emission certificates (nEZ 2022) will take place on December 6th and 8th, 2022.

  (Average Quotes Exchange / OTC)   
Instrument04/11/2211/11/22Change
EUA (Spot-Market)76.32 EUR75.81 EUR-0.51 EUR
EUA (December-2022-Future)76.36 EUR75.84 EUR-0.52 EUR
VCU (Voluntary Carbon Units ø)8.07 USD5.48 USD-2.59 USD
VER (Gold Standard Spotmarkt ø)3.21 USD3.33 USD+0.12 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)98.60 USD95.92 USD-2.68 USD
EURO (Currency, Forex)0.9960 USD1.0354 USD+0.0394 USD

(The average exchange quotes and OTC-prices shows the average between bids and ask of several exchanges and OTC markets for carbon emission rights in the ETS. Bid and ask has usually in Spot Market a visible spread. The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. 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 (07/11/2022)

Dear Madam or Sir,

Since yesterday, representatives from around 200 countries are meeting for this year’s World Climate Conference in Sharm el-Sheikh, Egypt. However, the COP27 is taking place under difficult conditions: With the Corona pandemic no longer at the forefront, the Russian war of aggression in Ukraine and the resulting energy crisis threaten to weaken the global community’s common fight against global warming, and the increasing tensions between the USA and China are not a supportive factor either.

At the same time, the states still have a lot of catching up to do when it comes to naming or sharpening their national climate protection goals. A serious commitment to move away from fossil fuels, especially coal, despite or precisely because of the energy crisis, to press ahead with the reduction of the greenhouse gas methane and to finally introduce a mechanism for financing climate-related damage and losses are also marked deep red on the agenda.

It also remains an exciting question to what extent Europe and the USA can and want to become a driver of change from the side of the main polluters. In any case, the European programme “Fit for 55” seems to point in the right direction, if it is not adopted in too much of a weakened form at the end of the trilogue negotiations. And here again, the ETS, the European Emissions Trading Scheme, plays an important role. In this context, the institutions are still struggling to correct the excessively high total number of emission allowances once, to introduce a border adjustment mechanism (CBAM) to protect against distortion of competition, to include maritime transport and to sharpen the market stability reserve. Perhaps the results of Sharm el-Sheikh can provide tailwind here. Statements by MEP Peter Liese already suggest that funds from the ETS auctions could be used for climate protection measures in poorer countries.

Moreover, the World Climate Conferences are regularly intended to raise awareness among politicians and the public of the absolute urgency of the climate problem. The warnings always focus on the so-called tipping points, where interactions build up a tragic dynamic that could eventually become irreversible. For example, it is well-known that the Arctic is getting warmer much faster than the rest of the planet. According to a study by the CREAF research centre in Barcelona, this warming of the Arctic threatens to lead to a vicious circle. Experts refer to this as “Arctic amplification”. This is partly due to the fact that the earth’s surface is absorbing more heat due to the decrease in snow and ice cover on water and land. As a result, even a relatively small amount of warming in Siberia could significantly increase the extent of wildfires in the future. This would release large amounts of carbon stored in the permafrost there. And this, in turn, would further drive global warming.

The study analysed, among other things, satellite images of wildfires in the Siberian Arctic from 1982 to 2020. In these almost forty years, 44 per cent of the total fire area was accounted for by the last two years 2019 and 2020! According to the study, almost 150 million tonnes of carbon were released into the atmosphere by fire in these two years. This corresponds to a CO2 equivalent of almost 413 million tonnes. In 2020 alone, 423 fires burned over an area of almost 3 million hectares, according to the study. According to a statement by the Spanish National Research Council (CSIC), which was involved in the work, the released CO2 equivalent of 256 million tonnes is roughly equivalent to the annual CO2 emissions of Spain. It is also noteworthy that 2019 and 2020 were simultaneously the two warmest years of the study period.

Carbon trading had a classic chart run last week. The rally of the previous week ended at the so-called 200-day line at around 81 euros. The price then fell back in a retracement to almost 75 euros, where it found sufficient support. The market then sought orientation in a wide trading range of around four euros for the rest of the trading week. Here, the still persisting uncertainty with regard to possible interventions in the ETS does not make trading decisions any easier for both buyers and sellers.

  (Average Quotes Exchange / OTC)   
Instrument28/10/2204/11/22Change
EUA (Spot-Market)81.16 EUR76.32 EUR-4.84 EUR
EUA (December-2022-Future)81.21 EUR76.36 EUR-4.85 EUR
VCU (Voluntary Carbon Units ø)6.75 USD8.07 USD+1.32 USD
VER (Gold Standard Spotmarkt ø)3.36 USD3.21 USD-0.15 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)96.17 USD98.60 USD+2.43 USD
EURO (Currency, Forex)0.9964 USD0.9960 USD-0.0004 USD

(The average exchange quotes and OTC-prices shows the average between bids and ask of several exchanges and OTC markets for carbon emission rights in the ETS. Bid and ask has usually in Spot Market a visible spread. The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. 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