Category: Carbon Market News

Dear Madam or Sir,

At the beginning of last week, the Intergovernmental Panel on Climate Change (IPCC) presented its synthesis report, which makes it unmistakably clear that we can hardly achieve the target set in the Paris Climate Protection Agreement of 2015 of limiting global warming to a maximum of 1.5°C compared to the pre-industrial age, since we have already arrived at 1.1°C.

According to the report, around 3.6 billion people already live in regions that will be particularly affected by climate change.

In order to still meet the 1.5°C target, global emissions would have to be reduced by almost half by 2030 compared to 2019, and by 65% until 2035. From today’s perspective, an illusory goal, since emissions have increased significantly again after Corona.

In particular, the Intergovernmental Panel on Climate Change emphasized that the average global surface temperature has never risen as quickly as it has since 1970 for at least 2,000 years. It should be mentioned that the world population has more than doubled since 1970 and an end to the increase is not yet in sight.

The liberal German governing party FDP, on the other hand, is convinced that carbon emissions trading alone will bring about the necessary reduction in greenhouse gases. FDP remains opposed to a speed limit in Germany and has now ensured that Germany is seen as breaking its word at EU level for undermining the 2035 ban on internal combustion engine vehicles. The fact that this looks like clientele politics, since synthetic fuels require a multiple of energy and thus costs for production, seems to be of secondary importance in the party that leads the German Ministry of Finance, which apparently also reflects the damage to Germany’s reputation at EU level applies.

EU emissions trading prices have been very volatile over the past week as fears of another financial crisis persist. The fears are being fuelled in no small part by fears that Deutsche Bank could run into trouble, which could spark a European conflagration.

After the prices of EU emission allowances had been relatively optimistic in the last week until Friday, they collapsed after the EEX auction on Friday, but still showed a small plus on a weekly closing basis.

In the new trading week, a total of 11,842,500 EUAs will be offered on the EEX on all five trading days and it will remain important this week how strong the demand at the auctions will be.

(Average Quotes Exchange / OTC)
Instrument	17/03/23	24/03/23	Change
EUA (Spot-Market)	86.03 EUR	86.32 EUR	+0.29 EUR
EUA (December-2023-Future)	87.29 EUR	87.65 EUR	+0.36 EUR
VER (Natural Carbon Offsets)	3.48 USD	3.04 USD	-0.44 USD
VER (CORISA eligible Carbon Offsets)	2.28 USD	2.06 USD	-0.22 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	72.51 USD	74.90 USD	+2.39 USD
EURO (Currency, Forex)	1.0667 USD	1.0735 USD	+0.0068 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

Dear Madam or Sir,

Last week, the German Federal Environment Agency (UBA) published the preliminary greenhouse gas emission data for the past year. As a result, German emissions fell by 1.9% last year. According to the UBA, a total of 746 million tons of CO2 or its equivalent (CO2e) were emitted. Since 1990, annual emissions in Germany have already fallen by 40.4%.

Due to the increased energy production from coal caused by the Ukraine war, 10.7 million tons more were emitted in this area than in 2021, but the sector target of 257 million tons was just met thanks to the increase in renewable energies and the relatively mild winter.

Unfortunately, the sectors that have been subject to pricing as a result of German national emissions trading since 2021 remain above the target values. The transport and building sectors are again above the annual emission levels specified in the German Federal Climate Protection Act.

In the transport sector, around 1.1 million tonnes more CO2 were emitted than in the previous year, despite record figures for the registration of e-cars. With 148 million tons of CO2, this area is well above the permitted 138.8 million. In the buildings sector, around six million tons or 5.3% less were emitted in 2022, but with 112 million tons of CO2, the buildings were still above the legal limit of 107.4 million.

The share of renewables in gross electricity consumption rose from 41.2% to 46.2%. In the heat sector, the proportion also rose from 15.8% to 17.4% and the total reduction in greenhouse gas emissions in Germany last year through the use of renewable energies amounted to a remarkable 232 million tons of CO2.

In the past week, the market for European carbon emission allowances followed the financial markets and fell across the board. EUAs in the December 2023 benchmark futures contract were just above the €86 mark at last Friday’s low but recovered slightly to close the last week of trading at €87.29, a loss of 12.5% on a weekly closing basis.

The EUAs followed the bank stocks. In the same period, the EURO STOXX Banks Index lost 11.4% amid fears of a new financial crisis after several US banks had to be supported and the Swiss Credit Suisse was saved from bankruptcy with 50 billion. In the meantime, the major Swiss bank UBS has signalled an interest in taking over the ailing Credit Suisse.

Institutional investors such as banks and financial institutions in particular got out of emission rights last week and the spread between the auction results on Friday and the current stock exchange trading was exceptionally high at minus 2.4%.

In this market environment, it is difficult to predict whether it is just a financial crisis “light” or there will be a déjà vu from 2008.

Should things calm down, the EUA could quickly move back above the 90 Euro mark. As long as the financial markets remain nervous, the next technical support would be around the 83 euro area.

The Leipzig energy exchange EEX will auction a total of 9,168,000 EUAs next week and 775,500 emission allowances for aviation (EUAA) on Wednesday. The demand for the auctions in the coming week will remain an important price-influencing factor on the market.

(Average Quotes Exchange / OTC)
Instrument	10/03/23	17/03/23	Change
EUA (Spot-Market)	98.22 EUR	86.03 EUR	-12.19 EUR
EUA (December-2023-Future)	99.80 EUR	87.29 EUR	-12.51 EUR
VER (Natural Carbon Offsets ø)	3.52 USD	3.48 USD	-0.04 USD
VER (CORISA eligible Carbon Offsets  ø)	2.29 USD	2.28 USD	-0.01 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	82.66 USD	72.51 USD	-10.15 USD
EURO (Currency, Forex)	1.0640 USD	1.0667 USD	+0.0027 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

Dear Madam or Sir,

From the beginning of this millennium to 2021, at least 145 billion euros in damage has been caused in connection with climate change, as the German State Secretary for the Environment Christiane Rohleder summed up last week.

The majority of this, amounting to 80 billion euros, only occurred in the four years from 2018 to 2021 and the study puts the damage by the middle of the century at up to 900 billion euros. Added to this is damage that is difficult to measure financially, such as deaths from flooding and heat, as well as severe strain on ecosystems and further loss of biodiversity on our planet.

In order to mitigate this, the climate experts at the German National Academy Leopoldina presented a roadmap last week that is intended to accelerate the path of the economy towards renewable energies. To this end, the scientists have developed six main ideas.

One of the important issues is the completion of the EU emissions trading system EU ETS in the direction of a long-term trading system that includes all emitters as an important control system for compliance with the Paris climate protection agreement negotiated in 2015.

In addition, the technological removal of CO2 from the atmosphere, the expansion of a “green” hydrogen infrastructure, the expansion of digital electricity networks (smart grids), the expansion of renewable energies and a market-compliant and accelerated planning of the energy system conversion are important building blocks in the necessary decarbonization of Europe.

Prices in EU emissions trading system EU ETS have recovered over the past week from the previous week’s profit-taking and buyers have returned, taking the benchmark contract of EU emissions allowances (EUA-Dec-2023) back above 100 euros last Friday – technical driven.

If EUAs sustain above the resistance line of around EUR 100 this trading week, the next key technical resistance would be in the area of just over EUR 105. If this should not succeed, the next relevant support would be in the area around 92 euros.

The Leipzig EEX is auctioning a total of 11,842,500 EUA on all trading days this week. The weekly auctions for German national emission allowances nEZ also take place this Tuesday and Thursday.

(Average Quotes Exchange / OTC)
Instrument	03/03/23	10/03/23	Change
EUA (Spot-Market)	91.04 EUR	98.22 EUR	+7.18 EUR
EUA (December-2023-Future)	92.18 EUR	99.80 EUR	+7.62 EUR
VER (Natural Carbon Offsets ø)	3.45 USD	3.52 USD	+0.07 USD
VER (CORISA eligible Carbon Offsets  ø)	2.55 USD	2.29 USD	-0.26 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	85.98 USD	82.66 USD	-3.32 USD
EURO (Currency, Forex)	1.0636 USD	1.0640 USD	+0.0040 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

Dear Madam or Sir,

In many cities around the world, people took to the streets again last Friday to demonstrate for more ambition in the fight against the climate crisis. In Germany alone, there were reportedly more than 200,000 demonstrators. The slogans on the placards demanded, among other things, “Climate protection instead of coal pollution” and “Speed limit now”. Around the globe, hundreds of demonstrations were announced under the slogan #tomorrowistoolate. At the protest in Berlin, Luisa Neubauer criticised the German government and the coal, oil and gas companies with particularly harsh words. The press quoted her as saying: “They had thought they would be able to get away with green words and green speeches – whether parties, Chancellor or corporations. They thought we wouldn’t notice if things went on under the radar, as if we had three more planets lying around on the highway road construction site.” The activist specifically denounced the behaviour of the German party FDP, which was not only blocking the energy transition and the construction transition in the German government, but now also The activist specifically denounced the behaviour of the German party FDP, which was not only blocking the energy transition and the construction transition in the German government, but now also the EU-wide end of the combustion engine.

The following statement is interesting in this context: “In the political discussion, we see the risk that the EU’s clear decision to phase out the internal combustion engine in 2035 will be questioned again. That carries the risk of a deadlock, and that would be fatal for the car industry.” It is remarkable that this statement comes from Audi boss Markus Duesmann, who in an interview with “Der Spiegel” emphasised the need for planning security for the car industry and its investments worth billions.

The positive role that the ETS has in decarbonising the economy, and in particular the high and further increasing price level of European pollution rights, can be seen among other things in the efforts of the large emitters in the steel and chemical sectors. And the pressure will increase even more after the current reform of the ETS. This was underlined, for example, by the German Chemical Industry Association (VCI). A communication to its members in December was entitled: ” Less free certificates and only under conditions”. The association pointed out that the tightening of benchmarks will further reduce free allocations to production plants covered by the EU ETS. In addition, these plants would be obliged to carry out energy audits. If the audit recommendations are not implemented, 20 percent of the allocated free emission certificates would be cancelled in the future. There will also be mandatory decarbonisation plans for the most emission-intensive plants. If the targets in these plans are not met, 20 per cent of the free allocations will also be cancelled.

The market for European pollution rights started the past trading week slightly below the psychologically important €100 mark. This was obviously the starting signal for speculative market participants to reduce their long positions and take profits. European carbon prices subsequently fell time and again during the week, finally recording a weekly loss of 5.4% and falling to their lowest level in more than two weeks. However, this attracted the expected interest from compliance buyers, which slowed the decline on Friday. The benchmark contract closed slightly below a technical support line, which can be interpreted as an indication that the price could also still fall slightly below the 90-euro mark.

Meanwhile, the question of when and how the frontloading of allowances under the REPowerEU plan will be integrated into the auction calendar has begun to take shape. According to leaked information, it appears that the corrections will first be implemented in the calendar in the summer, together with adjustments within the framework of the market stability reserve – in order to avoid multiple adjustments.

(Average Quotes Exchange / OTC)
Instrument	24/02/23	03/03/23	Change
EUA (Spot-Market)	96.36 EUR	91.04 EUR	-5.32 EUR
EUA (December-2023-Future)	97.39 EUR	92.18 EUR	-5.21 EUR
VCU (Voluntary Carbon Units ø)	4.00 USD	3.45 USD	-0.55 USD
VER (Gold Standard Spotmarkt ø)	2.47 USD	2.55 USD	+0.08 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	83.29 USD	85.98 USD	+2.69 USD
EURO (Currency, Forex)	1.0545 USD	1.0636 USD	+0.0091 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

Dear Madam or Sir,

Last year, the Federal Republic of Germany auctioned a total of 217 million national emission allowances in accordance with the German Fuel Emissions Trading Act (BEHG) at the Leipzig EEX and thus generated income of around 6.4 billion euros.

The aim of the BEHG is to reduce greenhouse gas emissions in the transport and building sectors, since no reduction in emissions has been recorded here in recent years. It remains to be seen whether this will lead to measurable success in the area of transport and traffic, a speed limit on German autobahns would certainly be easier to implement.

According to the ideas of the EU Parliament, around 45% of the buildings in the building sector should be renovated by 2033. A real estate industry association has calculated that this would mean up to 182 billion euros per year for Germany alone. According to the association, this is illusory, as is the 30% of building renovations proposed by the EU Commission.

From our point of view, the state is called upon to set up new subsidy programs, especially for buildings in administration, in the education and health sector as well as for industry and trade. Because the renovation of an average university hospital alone would be equivalent to the renovation of an entire small town and could be monitored much more easily.

In the European emissions trading EU ETS, the current EUA benchmark contract December 2023 broke through the mark of 100 euros as a benchmark for the first time last Tuesday and was also able to break through into the three-digit range on Wednesday and Friday. On Tuesday, the EUAs also closed above the 100 mark. On Friday, an attempt to stay above the psychological 100 level failed and carbon certificates ended last week’s trading week at 97.39, still up more than 1% on the weekly basis.

It remains to be seen whether the EUAs can continue to follow the previous sideways-up trend, or whether this support line will be broken down for speculative profit-taking. This might be a good time to make compliance purchases for plant operators. In recent years, it has often been the case that prices have tended to be rather bullish until the end of the compliance deadline.

(Average Quotes Exchange / OTC)
Instrument	17/02/23	24/02/23	Change
EUA (Spot-Market)	95.02 EUR	96.36 EUR	+1.34 EUR
EUA (December-2023-Future)	96.25 EUR	97.39 EUR	+1.14 EUR
VCU (Voluntary Carbon Units ø)	3.28 USD	4.00 USD	+0.72 USD
VER (Gold Standard Spotmarkt ø)	2.17 USD	2.47 USD	+0.30 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	83.00 USD	83.29 USD	+0.29 USD
EURO (Currency, Forex)	1.0694 USD	1.0545 USD	-0.0149 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