Emissions Trading / Carbon Market News (02/11/2020)

Dear Sir or Madam,

As part of the German government’s climate package, the “Law on National Certificate Trading for Fuel Emissions” or the Fuel Emissions Trading Act (BEHG) will come into force on January 1, 2021. The associated carbon dioxide pricing on fossil fuels put into circulation affects around 3,500 companies in Germany in the fields of natural gas, liquid gas, heating oil and diesel & Otto fuels.

In a transitional phase until 2025, trading in fossil fuels is regulated through the sale of certificates with a staggered fixed price of up to € 55 per tonne of CO2. From 2026, the certificates will then be awarded by auction, with a price range of 55-65 € / emission certificate and ton of CO2 being set for the first year. It has not yet been decided whether a price corridor will also be used in the following years. Calculated on the heating costs, these will increase by up to € 1.19 per square meter by 2025 if fossil fuels are used.

Also being discussed is the limitation of the apportionability to 50%, so that landlords would also have to bear part of the additional costs. The law aims to promote energy-efficient and climate-neutral building types and the use of renewable energies.

According to the German Federal Environment Agency, it is crucial that at the beginning there is a clear separation between the classic EU emissions trading sectors (energy and industry) and the new sectors (especially buildings and transport). Otherwise there is a risk that the reduction will mainly take place in the traditional sectors. A common system would therefore initially not provide sufficient financial incentives to say goodbye to climate-damaging technologies in buildings and mobility.

In the past week of trading, the prices for European emission rights (EUA) came under significant pressure due to the upcoming elections in the USA and the increasingly worsening corona crisis and fell a good seven percent on a weekly basis. This trend continues even at the start of the market today.

The total of 21.7 million emission rights, which will be auctioned in Leipzig this week, will also weigh on prices and it will remain interesting to see how much demand for the auctions is. In addition, the outcome of the elections in the USA will remain important, as will the further development of the corona pandemic in Europe.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)25.49 EUR23.70 EUR+0.54 EUR
EUA (December-2020-Future)25.49 EUR23.71 EUR+0.65 EUR
CER (Spot-Market)0.31 EUR0.29 EUR+0.03 EUR
ICE Brent Crude Oil (Benchmark Future)41.64 USD37.85 USD-1.16 USD
EURO (Currency, Forex)1.1860 USD1.1648 USD+0.0143 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into EUA. 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