Category: Carbon Market News

Ladies and gentlemen,

With the war in Ukraine, Putin is showing the West how powerless it is, since NATO intervention in the war would undoubtedly lead to a further escalation, in which the use of nuclear weapons cannot be ruled out.

What is particularly absurd, however, is the fact that Europe, and above all Germany, has made itself dependent on Russian natural gas and oil with its current energy policy. With every third litre of petrol, diesel or heating oil and with every second cubic meter of natural gas, we help finance the warmongers.

A radical change in energy policy is therefore required to prevent such toxic dependencies. And this can only be done through the further expansion of renewable energies, which at the same time achieves the decarbonization of the economy and society.

But the war in Ukraine has not only raised the prices of energy over the past week, but also of all other commodities, not least food and metals, which is driving up inflation accordingly.

Exactly the opposite effect was seen in the emission allowances last week, which showed the largest slump ever recorded. While the December contract was still showing an opening price of EUR 95.00 per EUA when the war began on February 24, 2022, the price slipped to a low of EUR 55.00 last Wednesday, which corresponds to a loss of 42%. By the end of the week, prices stabilized above the EUR 60 mark and closed at above EUR 65 last Friday.

The main reasons for the sharp decline were institutional investors and energy companies, which had to obtain liquidity through the sales, and technical sales were also triggered by the crash.

Since no one can currently predict with certainty how the situation in Ukraine will develop this week, high volatility on the commodity and energy markets and in emission certificates can be expected in the coming days. This morning, the quote for EUAs is still under pressure and just above 60-Euro-mark.

(Average Quotes Exchange / OTC)
Instrument	25/02/22	04/03/22	Change
EUA (Spot-Market)	87.74 EUR	65.48 EUR	-22.26 EUR
EUA (December-2022-Future)	88.14 EUR	65.10 EUR	-23.04 EUR
VCU (Voluntary Carbon Units ø)	9.44 USD	5.45 USD	-3.99 USD
VER (Gold Standard Spotmarkt ø)	10.27 USD	9.84 USD	-0.44 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	94.40 USD	118.03 USD	+23.63 USD
EURO (Currency, Forex)	1.1272 USD	1.0931 USD	-0.0341 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. VCUs and VERs are average prices (CBL markets). 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,

Putin’s long-prepared invasion of Ukraine has exposed a number of national and international mistakes and deficits which cannot be remedied or compensated for overnight. This repugnant act was described by Chancellor Scholz as a “turning point in time”, which is undoubtedly correct. What is questionable is where this turn of the times will lead. The previous international security policy has at least partly collapsed like a house of cards.

With the sanctions adopted so far, an alliance of states is trying to isolate the aggressor and its supporters politically and economically and thus ruin them financially. Whether this will succeed remains to be seen, while hundreds of millions of foreign currencies are pumped into the Russian war chest every day because states around the globe continue to import Russian oil, gas and coal. A fact that is absolutely obvious in a globalised world, but difficult to bear in this situation. Everyone has to ask themselves how far solidarity goes, how many hardships, deprivations and cuts in their own prosperity they are willing to sacrifice. As one commentator aptly put it: “There is no such thing as freedom for free”.

The international financial markets have logically reacted sensitively. The market for European pollution rights has also fallen back as an immediate reaction, although the loss over the course of the week does not show this so clearly. However, just before the Russian troops invaded, the EUAs were already close to the 96 euro mark again and then lost around 10 euros. Overall, however, market participants seem to expect prices to rise again. If more energy had to be generated from coal, then unfortunately emissions would also rise and with them the need for certificates. In today’s early trading, however, the price started lower again and is now charting above the 84 euro mark.

(Average Quotes Exchange / OTC)
Instrument	18/02/22	25/02/22	Change
EUA (Spot-Market)	89.05 EUR	87.74 EUR	-1.31 EUR
EUA (December-2022-Future)	89.47 EUR	88.14 EUR	-1.33 EUR
VCU (Voluntary Carbon Units ø)	10.77 USD	9.44 USD	-1.33 USD
VER (Gold Standard Spotmarkt ø)	9.00 USD	10.27 USD	+1.27 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	91.17 USD	94.40 USD	+3.23 USD
EURO (Currency, Forex)	1.1319 USD	1.1272 USD	-0.0047 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. VCUs and VERs are average prices (CBL markets). 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,

The storms Ylenia, Zeynep and Antonia caused a lot of human and material damage in Europe. According to an initial estimate, insured losses of EUR 900 million were caused by Zeynep in Germany and the losses insured by Ylenia also amount to at least EUR 500 million. Together with Antonia, who crossed us last night, the financial impact is well into the billions.

The new week will probably bring still a lot of wind, especially in northern Germany. Accordingly, more than 60% of Germany’s energy production was secured by wind energy yesterday afternoon. A total of 79% was generated from renewable sources, reducing carbon emissions per kWh to 141 grams. Coal accounted for only 10% of the energy mix and natural gas for less than 5%.

The prices for carbon emission allowances in Europe fell not only because of the lower demand in the energy sector and the ongoing Ukraine crisis, but also because Peter Liese, who sits for the German conservative party CDU and member of the European People’s Party in the EU Parliaments environment committee, had concerns about the strong price increase for European emission allowances (EUA). He therefore suggested that, in line with the market stability reserve introduced a few years ago, the auctioning of additional emission allowances should be made easier, but he wanted to prevent greater price volatility and a corresponding price collapse.

Currently, the regulations of the EU ETS allow further EUAs to be auctioned under certain circumstances, including if the carbon price is three times the average price of the last two previous years for at least 6 months. Some EU parliamentarians had now expressed ideas about releasing a further 100 million CO2 certificates from their “market stability reserve” if the CO2 price was twice as high as the average price in the two previous years for at least 6 months.

However, since everything takes a while with the bureaucracy monster EU, the concrete proposals are to be discussed in June and it cannot be assumed that any concrete measures will be drafted before the summer break.

(Average Quotes Exchange / OTC)
Instrument	11/02/22	18/02/22	Change
EUA (Spot-Market)	92.45 EUR	89.05 EUR	-3.40 EUR
EUA (December-2022-Future)	92.87 EUR	89.47 EUR	-3.40 EUR
VCU (Voluntary Carbon Units ø)	10.02 USD	10.77 USD	+0.75 USD
VER (Gold Standard Spotmarkt ø)	9.00 USD	9.00 USD	+0.00 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	94.86 USD	91.17 USD	-3.69 USD
EURO (Currency, Forex)	1.1352 USD	1.1319 USD	-0.0033 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. VCUs and VERs are average prices (CBL markets). 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,

Already during the coalition negotiations of the current government of the Federal Republic of Germany, Annalena Baerbock, as designated Foreign Minister, demanded that international climate policy was to be placed in her ministry. In fact, Baerbock thus took on an enormously important, additional responsibility, which is a mammoth task not only because of the current foreign policy challenges.

Against this background, one should understand the announcement that one of the world’s most high-profile environmental activists is to move to the Foreign Ministry on 1 March. The US-American and former head of Greenpeace, Jennifer Morgan, is to serve first as special envoy and then as state secretary (for which German citizenship is still required) as a hub between the German ministries, but above all as a link between the international environmental departments and climate activists worldwide. This also means that Germany will be represented at upcoming climate conferences either by the Foreign Minister or by the former head of Greenpeace. This represents an immense political upgrading of this already highly significant issue.

Exciting was as well the situation on the carbon market in the past trading week. On the way to the 100-euro mark, a proposal by MEP Peter Liese to release allowances held in the MSR and to lower the threshold at which the so-called 29a mechanism (measures in case of excessive price fluctuations) was triggered burst. Such and similar interventions to control sudden price spikes in the ETS have been more or less actively discussed for a year now, ever since it became clear that hedge funds have a stake in the sharp price increases of EUAs.

But emission allowances have already recovered, recouping almost half of the week’s losses, as compliance buyers took advantage of the moment. Previously, the reference price had briefly fallen below the 90-euro mark. However, the price remained within the upward trend channel, suggesting a further recovery and a renewed attack on the 100-euro mark. Energy prices also continued to rise, not least due to the tensions in connection with Ukraine.

(Average Quotes Exchange / OTC)
Instrument	04/02/22	11/02/22	Change
EUA (Spot-Market)	96.03 EUR	92.45 EUR	-3.58 EUR
EUA (December-2022-Future)	96.45 EUR	92.87 EUR	-3.58 EUR
VCU (Voluntary Carbon Units ø)	8.40 USD	10.02 USD	+1.62 USD
VER (Gold Standard Spotmarkt ø)	8.00 USD	9.00 USD	+1.00 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	92.80 USD	94.86 USD	+2.06 USD
EURO (Currency, Forex)	1.1131 USD	1.1352 USD	+0.0221 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. VCUs and VERs are average prices (CBL markets). 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,

The first major storm in 2022 is causing severe damage in northern Germany with wind speeds of hurricane force in northern Germany and in Great Britain. In addition to fallen trees and failed trains, a storm surge flooded the fish market in Hamburg-Altona.

This is due to a long-standing constellation of a high over western Europe and a low in the direction of North America, which has resulted in persistently cloudy, but mostly mild weather in Germany in recent weeks.

Now many will say that storms and grey weather are nothing unusual in Germany. That is correct so far, but the duration of the constellation of the stuck low and high over western Europe is related to the change in the jet stream, the intensity of which has measurably changed over the past two decades. And that has to do with climate change, as global warming has reduced the temperature differentials that drive the jet stream.

Weather conditions can also persist in other constellations over weeks or months, as was the case in the drought summer of 2018. So if a constellation between several summer highs is established over Central Europe, there can be periods of drought, which bring agriculture and forests to their breaking point, or in a similar constellation as now, this can mean a rainy summer with sometimes heavy rain events, like we are experiencing have experienced in the past year.

CO2 emission allowances have been bullish again over the past week, with the EUA December contract trading briefly above the EUR 90 mark last Friday at EUR 90.63. This was thanks to a bullish energy environment, with Brent crude holding above the USD 90 level.

This week, 11,949,000 EUA will be auctioned again at the Leipzig EEX and on Tuesdays and Thursdays nEZ from national emissions trading can already be auctioned for 2022 at a price of EUR 30.00 or at a price of EUR 25.00 for the previous year, insofar as there are still sufficient contingents within the framework of the 10% additional purchase rule.

(Average Quotes Exchange / OTC)
Instrument	21/01/22	28/01/22	Change
EUA (Spot-Market)	84.42 EUR	89.48 EUR	+5.06 EUR
EUA (December-2022-Future)	84.47 EUR	89.92 EUR	+5.45 EUR
VCU (Voluntary Carbon Units ø)	7.14 USD	7.51 USD	+0.37 USD
VER (Gold Standard Spotmarkt ø)	7.38 USD	7.55 USD	+0.17 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	87.67 USD	90.59 USD	+2.92 USD
EURO (Currency, Forex)	1.1347 USD	1.1131 USD	-0.0216 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. VCUs and VERs are average prices (CBL markets). 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