Emissions Trading / Carbon Market News (02/05/2023)

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)   
EUA (Spot-Market)88.25 EUR85.85 EUR-2.40 EUR
EUA (December-2023-Future)89.72 EUR87.34 EUR-2.38 EUR
VER (Natural Carbon Offsets)2.63 USD2.69 USD+0.06 USD
VER (CORISA eligible Carbon Offsets)1.69 USD1.67 USD-0.02 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)81.77 USD80.26 USD-1.51 USD
EURO (Currency, Forex)1.0990 USD1.1033 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