Emissions Trading / Carbon Market News (02/10/2023)

Dear Madam or Sir,

Some people here in Germany will have fond memories of the weather this September, as they were almost entirely spoiled with Mediterranean temperatures. According to the calculations of the German Weather Service (DWD), September 2023 was actually the warmest since measurements began in 1881. After 1959, it was also the second sunniest and, with around 246 hours of sunshine, exceeded the target for a September by 150 hours or almost 65 percent. This not only sounds unnatural, it actually is unnatural. On numerous days, the summer temperature of 25 degrees was clearly exceeded, at its peak even 33.3 degrees were measured. Compared to the reference period from 1961 to 1990, the average temperature was plus 3.9 degrees, which, according to the DWD, is “an unprecedented value in the annals of weather records”. As was to be expected, September was also much too dry. Compared to the reference period 1961 to 1990, only slightly more than half the precipitation fell, at around 32 litres.

What may sound like a comparatively harmless example of climate change, however, must be seen in context. It is absolutely obvious that record months like September and record years pile up on top of each other like stairs and no one can claim in 5 or 10 years that they could not have foreseen the development. And it is precisely this simple foresight, combined with the gigantic costs caused by climate extremes, that must determine our behaviour today.

Anyone who has their own family home and owns or has at least ordered an e-car was able to apply last week for a subsidy programme for self-sufficiency in energy, which was primarily intended to appeal to people in rural areas. It was a combination package of a photovoltaic system, solar power storage and charging station and offered a grant of up to 10,200 euros. There was a total of 300 million euros in the funding pot and by the end of the first day the pot had already been exhausted. On Tuesday, around 190,000 visitors informed themselves about the programme on the website of the state development bank KfW, 66,000 people registered and around 33,000 already had the application approval in their email inbox by the end of the day.

The German government wants to put 15 million e-cars on the road by 2030, seven years from now, but so far only a tenth of that has been achieved. Car manufacturers are ramping up production of e-cars and the government is investing in subsidy programmes, but demand remains lacking. VW sales director Imelda Labbé told the magazine “Automobilwoche” that there is a need to focus more on groups of buyers “who do not have their own home and therefore do not have a secure charging infrastructure”. This seemingly completely logical realisation must spread as quickly as possible.

European carbon prices already fell at the beginning of the last trading week, ending the previous rise at the 86-euro mark. Two consecutive, relatively strong auctions slowed the decline somewhat in the second half of the week, but strong uncertainty remained about the most likely positioning of investment funds in the coming days. The December benchmark contract was most recently oriented towards the 81.50-euro mark and it now remains to be seen whether the price has already found a new support line here or whether it will continue to head south.

  (Average Quotes Exchange / OTC)   
EUA (December-2023-Future)85.48 EUR81.67 EUR-3.81 EUR
VER (Natural Carbon Offsets)2.29 USD1.82 USD-0.47 USD
VER (CORSIA eligible Carbon Offsets)0.75 USD0.75 USD+0.00 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)93.54 USD92.29 USD-1.25 USD
EURO (Currency, Forex)1.0644 USD1.0589 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.

With kind regards,

ADVANTAG Services GmbH