Emissions Trading / Carbon Market News (07/12/2020)

Dear Sir or Madam,

In recent months, the issues of the corona pandemic, the US presidential election and unregulated Brexit have hit the CO2 market hard. Looking at the current news situation, unfortunately none of these issues has yet been finally stamped as settled: The extremely difficult political balancing act of trying to find appropriate yet effective measures to deal with the corona cases does not seem to have been successful in any European country. The recent speech by the outgoing US President Trump does not change the officially confirmed election results, but it does give a bad hint for the coming weeks. And the summit talks between Ursula von der Leyen and Boris Johnson also remained fruitless.

In the sum of these considerations, a significantly lower CO2 price could be below the 25-euro mark – but that is not the case. Instead, the market continued its rally that started at the beginning of November and recently broke through the psychologically important 30-euro mark again. In the search for reasons for this, the connection with the delay in forthcoming auctions and free allocations is naturally obvious, even if these fresh certificates from the fourth trading period could not be used for the current compliance anyway. And then there is the price of oil, which has also picked up speed again and is showing a remarkably similar course to that of pollution rights.

In addition, however, the political efforts to curb global warming have changed the landscape, as an online workshop of the European Commission on the future of the Market Stability Reserve (MSR) revealed a few days ago. Similar to the steering measures taken by OPEC+ countries to stabilise oil prices, the European Commission intends to keep a close eye on the efficiency of the MSF. It should serve as a robust instrument to achieve the net zero emissions target for 2050. To this end, the expert panel expects changes to the rules of the MSF next year, including its trigger levels and rate of uptake.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)28.13 EUR30.11 EUR+1.98 EUR
EUA (December-2020-Future)28.13 EUR30.11 EUR+1.98 EUR
CER (Spot-Market)0.29 EUR0.30 EUR+0.01 EUR
ICE Brent Crude Oil (Benchmark Future)48.17 USD49.06 USD+0.89 USD
EURO (Currency, Forex)1.1963 USD1.2122 USD+0.0159 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