Emissions Trading / Carbon Market News (09/10/2023)

Dear Madam or Sir,

In the first six months of this year, emissions from electricity generation in the European Union fell by 17%, due in particular to the further expansion of renewable energies and the lower use of coal at EU level. This corresponds to a decrease of approximately 59 million tons of CO2.

But it is not only the EU that has made a positive presentation here, but also one of the world’s main emitters of greenhouse gases, the USA. Here, carbon emissions from electricity generation also fell by 8.6% in the first half of 2023, which was due to the 27% decline in coal-fired power generation. And in Japan, emissions from fossil fuels in electricity generation also fell by a remarkable 12%, as the energy think tank Ember reported. As a result, Japan emitted 25 million tons of carbon less in the first half of 2023.

Globally, this has meant that carbon emissions from electricity generation have remained almost unchanged and may have reached their peak here.

However, the German federal government is clearly missing its emissions reduction targets in the buildings and transport sectors, even though the federal government has presented a new climate protection program. There remains around 200 million CO2 too much, which makes achieving the climate protection goals a long way off, as does the goal of being net zero by 2045.

The new EU Climate Commissioner Wopke Hoekstra has now spoken out in favour of a target of 90% reduction in greenhouse gas emissions by 2040. According to calculations by analysts of the London Stock Exchange, this would mean a price for a ton of carbon emission or its equivalent in other greenhouse gases (CO2e) of more than 400 euros per ton.

Currently, the prices for European Emission Allowances remain under pressure and ended with a loss of 1.21 euros or 1.5% based on the weekly closing price. Last Tuesday, the benchmark future EUA-December-2023 closed below the 80-euro-mark for the first time since the beginning of February, but was able to assert itself above it again from Wednesday, even if Brent oil lost a significant 8.5% on a weekly basis.

What will be interesting next week will be to what extent the Hamas attack on Israel contributes to the uncertainty in the financial, energy and commodity markets regarding a potential expansion.

Last Wednesday, a primary market auction of 1,000,000 EUA for Northern Ireland took place on the European Energy Exchange for the first time this year. Due to the Polish auction next Wednesday, a total of 14,599,500 EUA will be auctioned on all trading days this week.

  (Average Quotes Exchange / OTC)   
EUA (December-2023-Future)81.67 EUR80.46 EUR-1.21 EUR
VER (Natural Carbon Offsets)1.82 USD1.74 USD-0.08 USD
VER (CORSIA eligible Carbon Offsets)0.75 USD0.74 USD-0.01 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)92.29 USD84.45 USD-7.84 USD
EURO (Currency, Forex)1.0589 USD1.0588 USD-0.0001 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