Despite the Ukraine war and the associated increased use of coal in Asia and Europe for energy production, global emissions of carbon dioxide will only increase by less than 1% in 2022 according to calculations by the International Energy Agency (IEA).
According to the head of the IEA, Fatih Birol, this is due to the increased worldwide expansion of renewable energies, above all photovoltaics and wind power, which increased by 700 terawatt hours. Furthermore, the increased use of electromobility has made a significant contribution to the reduction in the transport sector.
Last Wednesday, the responsible committee for energy and climate protection in the Bundestag decided that, contrary to the original plans of the federal government, waste incineration would be postponed by a year and should therefore not be included in national emissions trading in 2023, but only in 2024 in accordance with the Fuel Emissions Trading Act (BEHG).
The prices for CO2 certificates in the mandatory EU emissions trading system (EU ETS) moved sideways in the past week in a range between 66.26 and 69.69 euros.
A total of 12,494,500 EUAs will be auctioned on the EEX this week on all five trading days, as well as any desired quantity of national German emission certificates for 2022 on Tuesday and Thursday.
(Average Quotes Exchange / OTC)
Instrument
14/10/22
21/10/22
Change
EUA (Spot-Market)
67.95 EUR
69.03 EUR
+1,08 EUR
EUA (December-2022-Future)
68.03 EUR
69.10 EUR
+1.07 EUR
VCU (Voluntary Carbon Units ø)
7.89 USD
6.38 USD
-1.51 USD
VER (Gold Standard Spotmarkt ø)
3.76 USD
3.20 USD
-0.56 USD
nEZ (German National Carbon Units)
30.00 EUR
30.00 EUR
+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)
91.80 USD
93.52 USD
+1.72 USD
EURO (Currency, Forex)
0.9721 USD
0.9862 USD
+0.0141 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.
Greta Thunberg, who at just 19 has already become the icon of the global climate movement, gave a remarkable interview to German television last week and received widespread acclaim for her nuanced and considered remarks. In essence, the young activist called for nothing less than a cultural change: “The longer we delude ourselves that we can solve the climate emergency within the existing system without treating it like a real crisis, the more time we will lose.” She cited the Corona measures as a comparison. These had impressively demonstrated that mankind was indeed capable of responding appropriately to a global emergency and managing it. In general, people have even accepted significant personal restrictions in their lives for this purpose, and this is also because the media have reported on the dangers and the decided countermeasures 24/7. This has had a great influence on political decisions as well as on the acceptance of the population. But this is far from being the case with climate change. The most important thing, therefore, says Thunberg, is to “recognise that we are in an emergency, otherwise everything else is useless!”
Of course, she would remain a climate activist for life, but actually we need billions of climate activists who understand climate change as a real crisis and act accordingly. In this context, she quoted the UN Emissions Report, according to which “by 2030 we will be using twice as much fossil energy as would be compatible with the 1.5-degree target and we are already at 1.2 degrees today”.
John Ploegg, a distinguished analyst, recently pointed out another important aspect: he warned that clean energy production technologies also require many raw materials, including rare earths. The electronic controls, storage systems, electric motors and transformation technology related to renewable energy rely on metals such as copper, lithium, nickel and cobalt, as well as the rare elements gallium, germanium, indium, tellurium and numerous platinum group elements. However, many of these metals are mainly found in countries with higher geopolitical and social risks. It is therefore necessary to adapt to this at an early stage in order not to fall into a new dependency trap.
The carbon market again had a sideways movement last week, with December future rallying to €69.50 on Thursday, but falling again in a narrow range on Friday. The market laments the lack of real signals from politicians regarding possible planned interventions in the ETS. Analysts, meanwhile, have estimated that it could take four years for EUA prices to recover to recent levels if REPowerEU sales were to take place.
Oil prices were similarly disoriented, as the market was spoilt for choice between announcements about supply curbs on the one hand and an oil price cap on the other. Half of the significant gains from the previous week were given back.
(Average Quotes Exchange / OTC)
Instrument
07/10/22
14/10/22
Change
EUA (Spot-Market)
68.55 EUR
67.95 EUR
-0.60 EUR
EUA (December-2022-Future)
68.66 EUR
68.03 EUR
-0.63 EUR
VCU (Voluntary Carbon Units ø)
8.61 USD
7.89 USD
-0.72 USD
VER (Gold Standard Spotmarkt ø)
3.76 USD
3.76 USD
+0.00 USD
nEZ (German National Carbon Units)
30.00 EUR
30.00 EUR
+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)
97.92 USD
91.80 USD
-6.12 USD
EURO (Currency, Forex)
0.9742 USD
0.9721 USD
-0.0021 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.
in the first three quarters of this year, emissions from the EU energy sector have risen by about 8% compared to 2021, according to data from a climate analysis research institute. This development unfortunately was to be expected, not least because coal-fired power generation had to be intensified. So Russia’s invasion of Ukraine has paradoxically meant that it is not electricity generation powered by natural gas that can help phase out coal as a bridging technology, but that it is now – at least temporarily – the other way round.
But of course, this does not change the overarching goal of decarbonising the economy, which is to be achieved primarily by switching from fossil fuels to renewable energies. Of course, a short-term plus for coal is a step backwards, as it is simply the most CO2-intensive energy source, but the complete abandonment of fossil energy must be achieved as quickly as possible.
News from the energy company RWE is a positive signal in this respect. RWE wants to bring forward the coal phase-out by eight years to 2030. This is included in the key points of an agreement between RWE, the Federal Ministry of Economics and the Ministry of Economics of North Rhine-Westphalia. The decision would leave about 280 million tonnes of coal in the ground. This would correspond to about 280 million tonnes of CO2 that would no be emitted any more. RWE boss Markus Krebber explained that the phase-out would be socially acceptable and would not be at the expense of the employees. RWE also wants to invest massively in renewable energies in order to make an additional contribution to the phase-out of coal.
This will also be noted with pleasure by the EU parliamentarians who, with the “Fit for 55” programme, are pursuing the goal of reducing net greenhouse gas emissions by at least 55% by the year 2030 and adapting the legislation required for this. This includes, among other things, strengthening and tightening the European Emissions Trading Scheme (ETS) and a new, stand-alone emissions trading system for buildings and road transport. This is supposed to be an essential step towards achieving climate neutrality by 2050, which in turn is the EU’s binding goal under the European Climate Change Act.
Another programme currently under heated discussion, entitled RePowerEU, is now unfortunately aiming in exactly the opposite direction with the question of whether this programme should be partly financed by intervening in the ETS or whether electricity costs can be reduced by a temporary glut of EUAs. Decisions on this have not yet been made, but the discussion alone has already had a significant impact on the carbon market. For example, the President of the European Commission, Ursula von der Leyen, called on Wednesday for an increase in funding for the REPowerEU programme, as otherwise the block would run the risk of fragmenting as member states introduce different levels of support for citizens and companies. Immediately after this news, EUA in December futures plunged from their daily high of 71.36 to below 67 euros.
The carbon market apparently fluctuated during the week between an initially bullish sentiment, which was also influenced by the sharp rise in oil prices, on the one hand, and uncertainty about possible market intervention on the other. The December benchmark contract traded between around €64.50 at the low and €71.36 at the high, repeating almost identically the performance of the previous week.
(Average Quotes Exchange / OTC)
Instrument
30/09/22
07/10/22
Change
EUA (Spot-Market)
66.58 EUR
68.55 EUR
+1.97 EUR
EUA (December-2022-Future)
66.73 EUR
68.66 EUR
+1.93 EUR
VCU (Voluntary Carbon Units ø)
8.18 USD
8.61 USD
+0.43 USD
VER (Gold Standard Spotmarkt ø)
3.96 USD
3.76 USD
-0.20 USD
nEZ (German National Carbon Units)
30.00 EUR
30.00 EUR
+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)
85.46 USD
97.92 USD
+12.46 USD
EURO (Currency, Forex)
0.9797 USD
0.9742 USD
-0.0055 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.
Last week, the German federal government decided on a so-called “defence shield” with a volume of 200 billion euros so that gas and electricity prices remain affordable for companies and consumers. The exact design will be worked out in the coming weeks.
The German Bundestag is currently deliberating on a second law to amend the Fuel Emissions Trading Act (BEHG), in which CO2 emissions from the transport and building sectors are priced. A major point of criticism is the inclusion of biomass firing systems in national emissions trading under BEHG, which is planned under certain conditions, as this would further increase prices.
There is also further criticism of the inclusion of waste incineration plants from next year, since this would make prices correspondingly higher, especially for municipal waste, and these costs would be passed on to companies and consumers. In addition, the waste could then be disposed of in other countries that do not have a price for greenhouse-gas emissions from municipal waste.
From 2026, the building and transport sectors are to be integrated into a second European emissions trading system (EU ETS2), which will make national emissions trading in Germany obsolete.
In European emissions trading system, prices moved sideways last week in a range of EUR 64.10 to EUR 71.95 for the December benchmark contract for EUAs.
In this trading week, four auctions with a total of 9,393,000 EUAs will take place at the EEX, in which certificates from the European and German contingent will be auctioned.
Due to the end of the submission of the German national emission certificates (nEZ) for the year 2021 last Friday, auctions for 2022 nEZ have been held regularly on Tuesdays and Thursdays since last week. The last date for this year is Thursday, December 8th, 2022.
(Average Quotes Exchange / OTC)
Instrument
23/09/22
30/09/22
Change
EUA (Spot-Market)
65.61 EUR
66.58 EUR
+0.97 EUR
EUA (December-2022-Future)
65.77 EUR
66.73 EUR
+0.96 EUR
VCU (Voluntary Carbon Units ø)
9.40 USD
8.18 USD
-1.22 USD
VER (Gold Standard Spotmarkt ø)
4.03 USD
3.96 USD
-0.07 USD
nEZ (German National Carbon Units)
30.00 EUR
30.00 EUR
+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)
86.75 USD
85.46 USD
-1.25 USD
EURO (Currency, Forex)
0.9690 USD
0.9797 USD
+0.0107 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.
Last Friday, the Fridays for Future (FFF) movement had called for the 11th global climate strike since its founding in 2018. According to media reports, hundreds of thousands of people followed the call in many countries – in Germany alone, a total of around 280,000 mostly young people took part in the protest for climate protection and climate justice. In Berlin, FFF activist Luisa Neubauer said: “Those who think there is no way out are left with nothing but despair. Those who know that there is another way can get going and act. We have the knowledge, so let’s get going.”
In addition to the well-known appeals to achieve the 1.5-degree target, FFF called for the German government to establish a special fund for climate and security. As part of the budget negotiations, 100 billion euros should be made available to accelerate the radical phase-out of all fossil energies. The current energy crisis reveals how vulnerable society is in terms of energy supply. The climate and energy crises are mutually dependent.
One can only agree with this. At the latest with the start of the unbelievably stupid war against Ukraine, it became clear to everyone how dangerous the dependence on fossil energies is. It became even clearer that hesitation in phasing out fossil fuels would be wrong in every way. Therefore, the demands of some European politicians to intervene in the Emissions Trading Scheme (ETS) in order to make fossil energy cheaper seem all the more incomprehensible.
And it is not only FFF supporters who warn against rash decisions. According to the Börsenzeitung, banks, energy traders, energy exchanges as well as utilities are also mobilising with EU lawmakers against possible restrictions on the ETS. In a joint letter from eight European associations to the responsible leaders of the EU Commission and Parliament as well as the Czech Council Presidency, they warn that the current efficient functioning of the ETS could be significantly impaired, which could then also threaten Europe’s decarbonisation efforts. In the letter, the associations reiterated that a diverse ecosystem of participants ensures that the carbon market is resilient, easy and cost-effective to access. It would also be better equipped to offer hedging and risk management solutions to companies. To achieve its decarbonisation goals, the EU needs a liquid and resilient market.
The background for this appeal is the current final negotiations for a reform of emissions trading, which is part of the major climate package “Fit for 55”. One of the proposals of the EU Parliament is to restrict participation in trading with CO2 certificates to compliance agencies and certain financial intermediaries. This should help to prevent market speculation and thus be a step against high energy prices. The EU Commission and the vast majority of EU member states reasonably reject such a restriction. However, the associations concerned fear that these ideas could still become part of a compromise. The Czech EU Presidency is keen to finalise an agreement on the reform of the ETS in the fourth quarter.
The prices for EUA had again approached the 100 euro mark a little over a month ago, before the aforementioned statements deeply worried market participants. In the past trading week, the price had initially held in a sideways movement just above 70 euros for lack of direction, but on Friday EUAs then fell by up to 7.2% to a new six-month low as traders reacted to the news that Germany is also considering a larger revenue target through the sale of EUAs under the so-called “RePowerEU” plan. According to this, it is not only about making fossil energy cheaper through a lower carbon price, but also about special revenues from the sale of additional emission allowances from the Market Stability Reserve (MSR).
There are certainly other effective instruments for this. Moreover, such a plan not only contradicts the purpose of the ETS and the MSR, but it is also short-sighted, because the price collapse so far, which was based solely on uncertainty, has already meant that the EU has collected around 250 million euros less each week at the auctions than would have been possible with a solid auction result. So, what is supposed to be additional revenue in the short term would turn out to be a financial loss in the long term.
(Average Quotes Exchange / OTC)
Instrument
16/09/22
23/09/22
Change
EUA (Spot-Market)
73.08 EUR
65.61 EUR
-7.47 EUR
EUA (December-2022-Future)
73.27 EUR
65.77 EUR
-7.50 EUR
VCU (Voluntary Carbon Units ø)
9.42 USD
9.40 USD
-0.02 USD
VER (Gold Standard Spotmarkt ø)
4.18 USD
4.03 USD
-0.15 USD
nEZ (German National Carbon Units)
30.00 EUR
30.00 EUR
+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)
91.46 USD
86.75 USD
-4.71 USD
EURO (Currency, Forex)
1.0014 USD
0.9690 USD
-0.0324 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.
