Emissions Trading / Carbon Market News (05/09/2022)

Dear Madam or Sir,

The US Department of Climate and Oceanography has reported that 2021 CO2 concentrations averaged 414.7 parts per million (ppm), which is the highest level in a million years and should be known to policymakers.

Even if the federal government reports that the German gas storage facilities are now well filled, the price for gas also influences the price of electricity, which has lost all traction on the electricity exchanges in Europe in recent weeks with prices of more than 1,000 euros per MWh for 2023 contracts.

However, at the end of the last trading week, the prices for gas and electricity on the European Energy Exchange fell significantly. Natural gas cost just EUR 225.11 per MWh on the spot market last Friday, and electricity also fell back to EUR 422.25 / MWh (German Power Future Baseload). The coming weeks will show how sustainable this relaxation is.

The relief package totalling 65 billion euros, which the German Chancellor Olaf Scholz presented last Sunday, is intended to help low earners and pensioners in particular with regard to inflation driven by energy prices.

In addition to various direct supports, Germany’s national emissions trading system should also be used here, in that the increase from 30 to 35 euros per tonne of CO2 will not take place on January 1st, 2023 and will be postponed by one year. From the point of view of climate protection, this is a completely wrong signal – a much better solution could have been created here.

The prices for EU emission allowances continued to collapse in the bearish environment last week, dipping well below the 80 euro mark. Since the end of last week, after the halving of the auction volume in August, a much higher number of certificates can be found in the EEX auctions.

This week, however, due to a working meeting of EEX, there are auctions of a total of 11,702,500 EUA only on Monday, Tuesday and Friday, but in the coming week the volume will increase to 20.5 million emission allowances, which of course is likely to be a downward pricing trend power. It will be interesting to see how the market absorbs this extremely high volume over the coming months.

This may be a good time for compliance buyers to start stocking up on certificates for this year now.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)90.03 EUR77.70 EUR-12.33 EUR
EUA (December-2022-Future)90.31 EUR77.89 EUR-12.42 EUR
VCU (Voluntary Carbon Units ø)9.56 USD8.44 USD-1.12 USD
VER (Gold Standard Spotmarkt ø)4.21 USD3.85 USD-0.36 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)100.82 USD93.02 USD-7.80 USD
EURO (Currency, Forex)0.9965 USD0.9956 USD-0.0009 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