Category: General

Dear Madam or Sir,

The new elections in Great Britain have now accelerated the former “infinite history” of Brexit to the maximum. Last week, the British Parliament approved the Brexit law and there is little doubt that the EU Parliament will shortly agree to the negotiated deal. This would finally put an end to all horror scenarios of an unregulated exit, but by no means all uncertainties have been resolved. Because the exit contract regulates the procedures for the separation, but not the basis for future relationships.

And this also affects the emissions trading system. There are of course working papers on the future direction, but far from a decision as to how the British will proceed with regard to CO2 pricing. Some experts predict a CO2 tax here, but there are also considerations regarding their own British trading system. This could then be linked to the European ETS and / or other systems. However, it is also still possible for Great Britain to remain in the ETS as a non-EU country, either until the end of the third trading period on December 31, 2020, or even, if legal requirements are implemented, even beyond.

With all these considerations in mind, the relevant question is floating around, what will become of the marked British EUAs, which were not auctioned in 2019 due to the risk of an unregulated Brexit. There are an estimated 120 to 150 million EUAs that could possibly still flow into the market. However, there is still no final clarity here. If, for example, they came onto the market in weekly auctions over 2020, that would roughly mean three million certificates per week.

The auction-free winter break began on Tuesday of the last trading week and the market reacted with an extremely significant price increase. From its lowest point on Monday, the price rose unstoppably and, after a short breather on Friday, passed the € 27 mark early this morning.

(Durchschnittliche Börsenkurse / OTC)
Instrument	13/12/19	20/12/19	Veränderung
EUA (Spotmarket)	24.01 EUR	26.58 EUR	+2.57 EUR
EUA (Dezember-2020-Future)	24.02 EUR	26,67 EUR	+2.65 EUR
CER (Spotmarket)	0.20 EUR	0.22 EUR	+0.02 EUR
ICE Brent Crude Oil (Benchmark Future)	64.93 USD	65.13 USD	+0.20 USD
EURO (Currency, Forex)	1.1120 USD	1.1078 USD	-0.0042 USD

(The average market prices and OTC prices show the respective mean of supply and demand of different trading venues for CO2 emission rights. Bid and ask usually deviate from the mean by several cents. Crude oil and euros show closing prices. The CER prices are CP2 -CERs, which can be used within the framework of the EU-ETS. Our market reports are not recommendations for trading emission rights or their derivatives and are for information purposes only. If you no longer wish to receive the newsletter, please send a short message to Sender.) 

Our trader team will be happy to answer any questions you may have.

Sincerely yours, 

Advantag Services GmbH

Dear Sir or Madam,

The Chilean leadership of the world climate conference, which ended yesterday with the biggest delay in its history, was clearly disappointed by the outcome of the summit. The participants probably could have started their departure already on Friday, because the efforts of Chilean Environment Minister Carolina Schmidt to get a presentable result in the extension failed because of bitter resistance of a few states – above all Brazil. But even the USA, Saudi Arabia and Australia did not want to commit themselves to binding regulations for international cooperation and thus in connection with global trade in climate protection certificates.

A year ago, the summit in Poland had already failed on the same question, and now it is to be finally addressed in Glasgow in 2020. However, one does not have to be a downright pessimist to express doubts here. The states do not shake off the decisions of Paris in principle, except for the USA, which had declared its withdrawal from the agreement and thus officially will step off on 4 November 2020. But these national interests remain, which are closely linked with the interests of the lobby around fossil energy sources and could not be overcome so far. Thus the question of how the international community of the UN wants to solve this knot justifiably arises.

A few days ago, the European Union also found itself facing a similar question, with its new Commission President von der Leyen pushing ahead with the proposal of a so-called “Green Deal”. Here it was Poland that refused to sign. But here, too, the focus should be on the other states, which have apparently understood that the pace of global processes in favour of the global climate lags far behind the worsening climate crisis. There is also a growing awareness and indignation that a few states are in a position to block important processes.

Last week, the CO2 market was once again influenced by speculative traders. During the first days of trading, the price stagnated at 25 euros. It was not until Thursday that the market began to gain momentum again. On Friday the price was even pushed to just below the 26 Euro mark. But the bulls apparently ran out of steam at this point. When the mark was not overcome, the bears again took over the direction. The price melted away and only found support in early trading just above EUR 23.50 today.

(Average Quotes Exchange / OTC)
Instrument	06/12/2019	13/12/2019	Change
EUA (Spotmarket)	24.88 EUR	24.01 EUR	-0.87 EUR
EUA (December-2019-Future)	24.94 EUR	24.02 EUR	-0.92 EUR
CER (Spotmarket)	0.18 EUR	0.20 EUR	+0.02 EUR
ICE Brent Crude Oil (Benchmark Future)	64.34 USD	64.93 USD	+0.59 USD
EURO (Currency, Forex)	1.1055 USD	1.1120 USD	+0.0065 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into 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

Dear Sir or Madam,

The German Chancellor Angela Merkel has again invited top representatives from politics and the automobile industry to this evening’s car summit. All participants are aware that there is still a wide gap between idea and reality when it comes to the environmentally relevant topic of electro mobility. In the run-up to the meeting, the Chancellor has set the target of one million charging stations in Germany by 2030 in her video pod cast. It has obviously become a crucial question whether the charging infrastructure should first be expanded or whether the production and sale of electric cars should first be boosted. Here again the question of range plays a decisive role. Drivers have been conditioned for decades to fossil fuel being available around the clock, seven days a week. Hardly anyone goes on a journey with a full can of gasoline in their car, no matter how long the planned journey may be. But electric mobility lacks exactly this simplicity. It is hardly surprising that flexibility plays a decisive role in the decision to buy. The Chancellor’s announcement therefore seems to be pointing in the right direction. In addition to this topic, other aspects will also be discussed, such as other drive technologies and autonomous driving.

The CO2 market has received a significant boost in the last trading week. The “never ending story” of the British EU withdrawal once again played a significant role in this. Instead of the planned Brexit there are now new elections, but this can hardly eliminate the real sticking points. The price for the European Pollution Rights (EUA) rose steadily during the week and even surpassed the 26 Euro mark for a short time. However, this trend was abruptly reversed on Friday, when massive selling was seen in the afternoon and the price leveled off at EUR 25.30.

(Average Quotes Exchange / OTC)
Instrument	25/10/2019	01/11/2019	Change
EUA (Spotmarket)	24.95 EUR	25.28 EUR	+0.33 EUR
EUA (December-2019-Future)	24.97 EUR	25.29 EUR	+0.32 EUR
CER (Spotmarket)	0.20 EUR	0.20 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	61.69 USD	61.52 USD	-0.17 USD
EURO (Currency, Forex)	1.1080 USD	1.1165 USD	+0.0085 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into 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