Category: Carbon Market News

Dear Madam or Sir,

In this decade, climate neutrality is a very big topic for companies to make their companies and assets sustainable.

In the future, for example, real estate without the use of renewable energies and concepts to make them climate-neutral can be regarded as problematic. Banks and funds will only invest in properties that meet the ESG criteria (Environmental, Social & Governance) or rate them accordingly.

In the foreseeable future, the rising prices for CO2 emissions will ensure that fossil fuels become a financial burden in all sectors of the economy, which must be reduced from a purely commercial point of view.

We have now integrated a new company into the IGP Advantag Group, IGP Green Solutions GmbH. Their field of activity is the achievement of the “Net-Zero” goal, especially for large commercial real estate, health and educational facilities as well as state and municipal buildings. The focus here is on bundling all the core competencies of the IGP Group and its partners in one hand in order to accompany companies and authorities on their way to climate neutrality. More information you can find at www.igp.green.

In the past week, emission rights have gained a good 4% on a weekly closing basis and on Thursday they also tested the air above the 90 mark.

Due to the public holiday, only three auctions will take place in the new trading week. On Monday and Tuesday, 2,409,000 EUAs are offered on the EEX in Leipzig and 775,500 EUAA on Wednesday, which can now be used just as well for stationary systems and not just for air traffic.

If the lower auction volume has not yet been priced in, this would have a price-driving effect. The demand for the auctions is therefore interesting this week.

(Average Quotes Exchange / OTC)
Instrument	05/05/23	12/05/23	Change
EUA (Spot-Market)	83.47 EUR	87.02 EUR	+3.55 EUR
EUA (December-2023-Future)	84.96 EUR	88.48 EUR	+3.52 EUR
VER (Natural Carbon Offsets)	2.11 USD	1.70 USD	-0.41 USD
VER (CORSIA eligible Carbon Offsets)	1.49 USD	1.38 USD	-0.11 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	75.30 USD	74.15 USD	-1.15 USD
EURO (Currency, Forex)	1.1127 USD	1.0836 USD	-0.0291 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,

With the step-by-step introduction of the European Agreement about a Carbon Border Adjustment Mechanism (CBAM), which has now been decided, the EU has made a major breakthrough. For many years, one of the most dissatisfying elements of the European Emissions Trading Scheme (ETS) was that companies were given large amounts of EUAs in the form of free allocations to counter the risk of so-called carbon leakage. This is understood to mean that companies could relocate their production to other countries with more lax emission restrictions for cost reasons related to the ETS. That would mean a significant locational disadvantage for Europe and could also lead to a rise in overall emissions. Although the free allocation of EUAs averted the danger of carbon leakage, it significantly undermined the goal of reducing emissions.

By introducing the world’s first “climate tariff”, the EU has now turned the tables. The planned levy will affect particularly CO2-intensive products such as iron and steel, cement, fertilisers, aluminium, electricity and hydrogen. Other segments could be added in the coming years. So from 2026, companies will have to pay a tax when importing the products concerned if they cannot prove a comparable climate levy in their country. The border adjustment will be increased in phases from then on, and will finally take full effect from the mid-2030s. The amount of the levy is based on the respective EUA price.

The EU is also pursuing the goal of promoting this price instrument worldwide. The “climate tariff” is thus a means of exerting pressure on trading partners to introduce carbon pricing and accelerate emission reductions. At the same time, free allocations can be phased out here in Europe, forcing intra-European companies to reduce their carbon emissions more quickly.

Last trading week, the carbon market had a real surprise to deal with. On Tuesday it became well-known that frontloading, i.e. the advance auctioning of EUA to generate €20 billion under the RePowerEU plan, which we had viewed very negatively, would not start already this year as expected, but only with the 2024 auction calendar. Within only 2 hours, the course then shot up by a good five euros and almost reached the mark of 91 euros again.

But the euphoria was unable to hold for long. Obviously, the strategically oriented market participants quickly realised that the principle “postponed does not mean cancelled” takes place here. Spontaneous profit-taking led to a massive correction immediately afterwards, which completely cancelled out the previous gains and pulled the price down by a further two euros. The price then found support at slightly above €83 and then meandered around the €85 mark.

(Average Quotes Exchange / OTC)
Instrument	28/04/23	05/05/23	Change
EUA (Spot-Market)	85.85 EUR	83.47 EUR	-2.38 EUR
EUA (December-2023-Future)	87.34 EUR	84.96 EUR	-2.38 EUR
VER (Natural Carbon Offsets)	2.69 USD	2.11 USD	-0.58 USD
VER (CORSIA eligible Carbon Offsets)	1.67 USD	1.49 USD	-0.18 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	80.26 USD	75.30 USD	-4.96 USD
EURO (Currency, Forex)	1.1033 USD	1.1127 USD	+0.0094 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,

Anyone who was out and about in Berlin in the past week will have seen climate activists of the so-called “last generation” on one or the other street, who have stuck to the street and thus led to one or the other traffic jam. On the whole, however, there were not significantly more traffic jams than on other typical days in the German capital.

The concern of the mostly young people is correct. Climate protection is the challenge of our days and nothing efficient has been done for long enough, which is why the concentration of greenhouse gases in the atmosphere has continued to rise.

But there are other ways to limit emissions of greenhouse gases. And here we are simply talking about carbon emissions trading, which, by reducing the available emission rights, inevitably uses an economic instrument to help achieve ecological goals.

The world-renowned head of the renowned Potsdam Institute for Climate Impact Research, Prof Dr Ottmar Edenhofer sees the carbon price as the ultimate instrument in the fight against global warming. He expects prices to continue to rise and sees no reason for a further prohibition policy. High prices in emissions trading would reflect the corresponding ecological truth, which would lead to the displacement of old technologies. Innovations would be financed with the revenue and the losers of this structural change would be relieved.

However, the climate economist calls for planning security for the economic players from the political camp. The state should regulate more intelligently and create appropriate markets.

Ultimately, we also see it as important to integrate more and more areas into emissions trading in order to develop a correspondingly comprehensive control effect. In addition, the pricing of goods at the borders to the EU with the Carbon Border Adjustment Mechanism CBAM is another important step, which will lead more and more countries to create their own emissions trading systems based on the European model. The ideal is a global trading system, which will certainly take a few more years.

In the past week of trading, EU emission allowances fell for the third time in a row on weekly basis, which is rather atypical compared to previous years. The submission deadline for the emission allowances for 2022 ended last Friday, and market participants clearly felt the continued decline in demand.

Various buyers may have been surprised in the last weeks that they did not receive the usual EUAs (European Allowances) from the exchange or their intermediary, but EUAAs (European Aviation Allowances), in the register account these are shown as aEUA.

Originally, these were only intended for use by aviation companies, but they can now also be used to meet the compliance duty of stationary system operators. There were no longer any relevant price differences on the market anyway.

(Average Quotes Exchange / OTC)
Instrument	21/04/23	28/04/23	Change
EUA (Spot-Market)	88.25 EUR	85.85 EUR	-2.40 EUR
EUA (December-2023-Future)	89.72 EUR	87.34 EUR	-2.38 EUR
VER (Natural Carbon Offsets)	2.63 USD	2.69 USD	+0.06 USD
VER (CORISA eligible Carbon Offsets)	1.69 USD	1.67 USD	-0.02 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	81.77 USD	80.26 USD	-1.51 USD
EURO (Currency, Forex)	1.0990 USD	1.1033 USD	+0.0043 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,

11 years ago, we brought up the idea of an import tax on products and services (Carbon Import Tax) in our market report as a possible solution to reduce distortions of competition for European producers and service providers.

Ultimately, the European Union has now implemented this idea and calls it the Carbon Border Adjustment Mechanism, or CBAM for short. Exact details of the implementation are still unclear, but the import of products from countries that do not have sufficient pricing of greenhouse gases will be subject to corresponding penalty taxes.

In addition, the inclusion of shipping from next year, the Europe-wide pricing of the transport and building sectors and process heat in small industry in EU emissions trading were finally approved last Monday. A time-limited upper limit of 45 euros per ton of CO2 should apply here, but it is currently questionable how this should actually be implemented, since it should ultimately remain a market economy mechanism.

Furthermore, a climate social fund of 65 billion euros is to be financed from the income from CO2 pricing, which is intended to cushion social hardship for households with low incomes.

This was all expected by the market. In addition, the number of buyers from companies subject to the compliance duties in EU emissions trading decreased, so that demand for European emission allowances continued to fall in the past week. The prices of the EUAs also fell in the last week and the emission certificates lost more than 4% on a weekly closing basis.

This week, a total of 11,842,500 EUAs will be auctioned on all five trading days at the Leipzig Energy Exchange EEX. In the next week, however, it will only be 6,757,000 due to the public holiday and the lack of a scheduled auction in Poland.

(Average Quotes Exchange / OTC)
Instrument	14/04/23	21/04/23	Change
EUA (Spot-Market)	92.34 EUR	88.25 EUR	-4.09 EUR
EUA (December-2023-Future)	93.84 EUR	89.72 EUR	-4.12 EUR
VER (Natural Carbon Offsets)	2.76 USD	2.63 USD	-0.13 USD
VER (CORISA eligible Carbon Offsets)	1.77 USD	1.69 USD	-0.08 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	86.46 USD	81.77 USD	-4.69 USD
EURO (Currency, Forex)	1.0994 USD	1.0990 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

Dear Madam or Sir,

Germany shut down its last three nuclear power plants last week. The move away from nuclear energy was initiated after the nuclear catastrophe in Fukushima in 2011 by former Chancellor Dr. Angela Merkel.

Environmental protection organizations and the Greens involved in the federal government are celebrating Germany’s complete phase-out of nuclear power, but there are also critical voices.

Last Friday, “RePlanet DACH” wrote an open letter to Federal Chancellor Olaf Scholz, which was signed by 25 international scientists, including climate researchers, physicists, economists and two physics Nobel Prize winners.

In it they call on the federal government to continue to operate the nuclear power plants in the interest of global climate protection. “We welcome the efforts of the federal government to reduce greenhouse gas emissions in Germany, a country of particular economic and political importance in Europe, in accordance with the international treaties that have been concluded. However, in 2022 the carbon emission targets were exceeded by 40 million tons due to the increased use of coal power due to savings in natural gas consumption, and estimates for 2023 assume 38 million tons. The Emsland, Isar II and Neckarwestheim II nuclear power plants delivered a total of 32.7 billion kilowatt hours of low-emission electricity in 2022. German private households recently consumed an average of 3190 kWh per year of electrical energy. Thus, these three power plants can supply more than 10 million or a quarter of German households with electricity. The lower amount of electricity required from coal-fired power plants could save up to 30 million tons of CO2 per year.”

The demand for CO2 emission rights should therefore be correspondingly high from the operators of the coal-fired power plants alone and lead to an additional increase in the price of German electricity, even if a large part will certainly already be priced in.

In the second week of Easter, however, demand in the EU emission rights market was lower and EUAs fell 2.9% compared to the previous week. After Tuesday still showed bullish tendencies, the rest of the shortened trading week was bearish.

This week, a total of 9,166,500 EUAs will be offered for auction on the Leipzig EEX over four trading days. The demand after the Easter holidays, shortly before the end of the submission deadline, will show whether many system operators still have to procure EUAs “last minute”.

(Average Quotes Exchange / OTC)
Instrument	06/04/23	14/04/23	Change
EUA (Spot-Market)	95.14 EUR	92.34 EUR	-2.80 EUR
EUA (December-2023-Future)	96.66 EUR	93.84 EUR	-2.82 EUR
VER (Natural Carbon Offsets)	3.27 USD	2.76 USD	-0.51 USD
VER (CORISA eligible Carbon Offsets)	2.18 USD	1.77 USD	-0.41 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	84.83 USD	86.46 USD	+1.63 USD
EURO (Currency, Forex)	1.0917 USD	1.0994 USD	+0.0077 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