Emissions Trading / Carbon Market News (08/01/2024)

Dear Madam or Sir,

In 2023, the German government generated a record amount of more than 18 billion euros from carbon emissions trading, which was five billion or 40% more than in the previous year.

A total of almost 8 billion euros was generated from the auctions in the European Emissions Trading system EU ETS and almost 11 billion euros in the national Emissions Trading System nEHS. This revenue is likely to continue to rise as the prices for national emissions certificates are now 50% more expensive than in 2023.

The fact that emissions trading has a strong steering effect is shown by the decline in the use of lignite in Germany, which in 2023 will have reached the level of 60 years ago, as published by the think tank Agora Energiewende This was mainly due to the expansion of renewable energies, which increased by 12% last year.

Compared to the previous year, carbon emissions therefore fell by 73 million tonnes to 673 million tonnes in 2023, the largest decrease ever. At 138 terawatt hours, wind energy was ahead of lignite for the first time last year, with 132 TWh.

However, there are also areas that clearly missed their targets, such as the transport sector once again. Here, a reduction of only 3 million to 145 million tonnes of CO2 was recorded, i.e. 12 million tonnes too much than planned.  This also applies to the building sector, which also showed a decrease of 3 million tonnes to 109 million tonnes of CO2, which is 8 million tonnes above the target.

Nevertheless, the installation of more than 1,000,000 solar systems last year and an increase of 14 gigawatts of energy generation also set a record. Commercial and private installations each accounted for half of this figure.

As Germany is the largest industrialised nation in the EU, these figures have put the price of CO2 emission allowances in the EU ETS under considerable pressure in the past trading week, which is why prices have fallen below the €80 mark again, down 5%.

However, the further we move towards the end of the submission deadline, a bullish development is likely, which is why it could be wise to use this weak phase to buy parts of your EUA portfolio.

This week, there are still no auctions on the EEX; they will only start again for EUAs in the following week. Prices could also be driven up by the fact that a prolonged cold front has arrived in Europe, which will increase demand for energy accordingly.

    (Average Quotes Exchange / OTC)       
EUA (December-2024-Future)80.37 EUR76.35 EUR-4.02 EUR
VER (Natural Carbon Offsets)0.91 USD1.18 USD+0.27 USD
VER (CORSIA eligible Carbon Offsets)0.59 USD0.54 USD-0.05 USD
nEZ (German National Carbon Units)30.00 EUR45.00 EUR+15.00 EUR
ICE Brent Crude Oil (Benchmark Future)76.83 USD78.75 USD+1.92 USD
EURO (Currency, Forex)1.1036 USD1.0943 USD-0.0093 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. 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