Emissions Trading / Carbon Market News (14/06/2021)

Dear Sir or Madam,

A report published last week once more commented critically on the practice of allocating free pollution rights to energy-intensive companies. This subsidy should protect domestic industries from disadvantages in global competition and prevent certain companies from relocating their production sites to countries where no CO2 tax is levied (carbon leakage).

It has long been criticized that as a result of these allocations, which at least initially fully covered the expected emission volumes, companies would be deprived of a significant incentive to improve their carbon footprint. In fact, emissions in these sectors have stagnated since the beginning of the third trading period in 2013, while significant reductions can be observed in sectors without these allocations.

It is obvious that state economic interests and climate protection are massively in each other’s way here and that those responsible must undoubtedly focus on this problem quickly and consistently in the sense of the proclaimed climate goals.

Irrespective of this, an absurd loophole in the system should be closed immediately. The EUAs allocated free of charge are not subject to any earmarking, which means that companies are free to convert surplus allowances into special revenues on the market. If free allocations exceed actual CO2 emissions, they should be usable for future years, but in no case saleable. While other companies must invest in sustainable, more environmentally friendly technologies in order to free themselves from the increasing financial burden of the CO2 levies, the companies receiving the gift can even cash in on the excess allowances. This cannot be the idea.

The technical problems in connection with the relocation of the ICE exchange from the UK to the Netherlands massively hindered trading during Monday, but the price nevertheless showed a strong recovery at the end of the day. The bullish trend continued in the following period and brought the price back to the level of the end of May, compensating the losses suffered until then. Only on the last trading day of the week the trend lost its momentum, but still closed with a plus of EUR 2.70.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)50.02 EUR52.74 EUR+2.72 EUR
EUA (December-2021-Future)49.97 EUR52.67 EUR+2.70 EUR
CER (Voluntary Spot-Market ø)2.95 USD3.02 USD+0.07 USD
VER (Gold Standard Spotmarkt ø)14.52 USD15.86 USD+1.34 USD
ICE Brent Crude Oil (Benchmark Future)71.62 USD72.58 USD+2.67 USD
EURO (Currency, Forex)1.2165 USD1.2107 USD-0.0058 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. CERs and VERs are average prices in the voluntary carbon offsetting market. 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