Emissions Trading / Carbon Market News (12/09/2022)

Dear Madam or Sir,

The carbon market was unable to hold the 70-euro mark in the past trading week, although it looked like it would in the middle of the week. But instead the EUA fell to a half-year low on Friday and recorded a loss of more than 15% on a weekly basis. The main reason for this was a profound uncertainty in the market triggered by statements by Eastern European politicians. For example, the Czech Minister of Industry and Trade, Jozef Sikela, spoke out in favour of opening a discussion on intervention in emissions trading. The Polish Prime Minister Morawiecki even suggested in an interview to suspend the entire emissions trading for one or two years.

EU energy ministers met in Brussels on Friday to approve a series of emergency measures to curb the effects of rising energy prices. The EU Commission is to present a concrete legislative proposal on this in the coming days. Among other things, it is to explore the temporary possibilities of skimming off excess profits of power producers as well as a cap on the price of gas.

However, a plan to sell emission certificates from the market stability reserve worth 20 billion euros was also discussed. Minister Sikela stressed that in an extraordinary situation, extraordinary measures are necessary without deviating from the common climate goals in the long term. But this formulation could prove to be a Pandora’s box. For what does the long term mean in this context? An international group of climate scientists has published a current analysis of the world climate in the journal “Science”. This involved the so-called “tipping points”, i.e. a critical threshold at which momentum is created so that further development becomes unstoppable. This means, for example, that after a certain point a glacier melt can no longer be stopped, no matter what is done. The researchers concluded that when global warming reaches an average of 1.5 degrees Celsius compared to the pre-industrial age, four such tipping points will be reached at once, namely with the Greenland and West Antarctic ice sheets, the dying of tropical coral reefs and the thawing of the permafrost. Based on developments in recent years, they predict that these 1.5 degrees will already be reached in 2030. That is, in less than eight years.

Can it therefore be responsible to even begin to think about measures that would set us back in terms of climate protection in order to cope with the current crises? After all, it was already clear immediately after Russia’s invasion of Ukraine that this war and the reactions to it would cost us all a lot of money and bring with it hardship. So, it is imperative to get out of panic mode as soon as possible and not to start again by hastily sacrificing urgent measures to curb global warming. If it is both right and possible to spend billions upon billions to prevent out-of-time despots from forcibly imposing their great power fantasies, then a similar effort must also be possible to achieve the global transformation towards a climate-neutral economy and a society that has truly understood that together we have only this one planet at our disposal.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)77.70 EUR65.90 EUR-11.80 EUR
EUA (December-2022-Future)77.89 EUR66.08 EUR-11.81 EUR
VCU (Voluntary Carbon Units ø)8.44 USD8.96 USD+0.52 USD
VER (Gold Standard Spotmarkt ø)3.85 USD4.10 USD+0.25 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)93.02 USD92.10 USD-0.92 USD
EURO (Currency, Forex)0.9956 USD1.0041 USD+0.0085 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