Category: Carbon Market News

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

Dear Madam or Sir,

Never before has the global community been so united across all political and economic divides as at the Paris Agreement. At the UN World Climate Conference in December 2015, 197 countries agreed on a global climate protection treaty. The states set themselves the goal of limiting global warming to 1.5 degrees Celsius compared to the pre-industrial era. In addition, the capacity to adapt to climate change should be strengthened and the flow of financial resources should be brought in line with the climate goals.

To actually achieve these goals, not only must each state make a truly serious effort on its own, but governments must also be prepared to cooperate and act in a coordinated manner with one another. Against this background, we can only shake our heads at the political theatre that the world powers are putting on in defiance of the global threat of climate change.

The weekly look at European emissions trading shows a modest one-week gain in EUA’s. At the beginning of the trading week, analysts at an investment bank had raised their forecast for 2023 to EUR 150, citing the severe shortage of allowances as the reason. Almost to confirm this, the auction on Thursday saw the highest number of bids in nearly a year, whereupon numerous unsuccessful bidders rushed to the secondary market and pushed the price up by a good EUR 3.50. Since then we have seen a sideways movement in a range between 84 and 86 euros. Now that the companies know their verified figures for 2021 and the deadline for fulfilling the surrender obligation is approaching, significantly falling prices are unlikely until April.

(Average Quotes Exchange / OTC)
Instrument	14/01/22	21/01/22	Change
EUA (Spot-Market)	82.03 EUR	84.42 EUR	+2.39 EUR
EUA (December-2022-Future)	82.08 EUR	84.47 EUR	+2.39 EUR
VCU (Voluntary Carbon Units ø)	8.31 USD	7.14 USD	-1.17 USD
VER (Gold Standard Spotmarkt ø)	8.37 USD	7.38 USD	-0.99 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	86.46 USD	87.67 USD	+4.75 USD
EURO (Currency, Forex)	1.1416 USD	1.1347 USD	-0.0069 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 Ladies and Gentlemen,

In addition to regional carbon trading systems and various gloabal mechanisms, the market for CO2 emission certificates and carbon credits is also divided into two broad categories – compliance markets and voluntary emissions trading, although there are also some overlaps.

There is mandatory trading with the European Emissions Trading System EU ETS or the national Emissions Trading System nETS in Germany.

Voluntary emissions trading is largely used to compensate for greenhouse gas emissions that are difficult or impossible to avoid. These so-called Verified Emission Reductions (VER) are again divided into several standards and mechanisms, such as the Gold Standard, the Voluntary Carbon Standard, the Natural Forest Standard or the Clean Development Mechanism.

The prices for emission allowances from the EUA’s mandatory CO2 emissions trading have increased tenfold in just a few years. According to a study, the research company Bloomberg NEF has now determined that voluntary certificates could also become significantly more expensive and could reach three-digit prices in 2050.Is that “the next big thing” in environmental markets?

Due to the fact that the VERs have changed since the beginning of the CORSIA trading system for the aviation industry, in which 66 countries have been participating since 2021 and can use various certificates from the voluntary emissions trading market, the prices have already tripled in the past few months and it does not look like it expect this trend to reverse.

The market for European emission allowances has been weaker in the past week. On Monday, the high-volume EUA December future opened at EUR 86.12, but then gave way immediately and was only able to close above the EUR 82 mark again on Friday thanks to support from the energy markets. There was also news about the French energy supplier EDF that it could produce up to 60 TWh less nuclear power this year, which could then cause up to 20 million tons of CO2 more, since it would then have to be generated with coal and gas. Accordingly, the need for just as many EUAs would be necessary, which should not have a negative impact on price development.

(Average Quotes Exchange / OTC)
Instrument	07/01/22	14/01/22	Change
EUA (Spot-Market)	85.42 EUR	82.03 EUR	-3.39 EUR
EUA (December-2022-Future)	85.15 EUR	82.08 EUR	-3.07 EUR
VCU (Voluntary Carbon Units ø)	8.44 USD	8.31 USD	-0.13 USD
VER (Gold Standard Spotmarkt ø)	8.36 USD	8.37 USD	+0.01 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	81.71 USD	86.46 USD	+4.75 USD
EURO (Currency, Forex)	1.1362 USD	1.1416 USD	+0.0054 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