Emissions Trading / Carbon Market News (17/01/2022)

Dear Ladies and Gentlemen,

In addition to regional carbon trading systems and various gloabal mechanisms, the market for CO2 emission certificates and carbon credits is also divided into two broad categories – compliance markets and voluntary emissions trading, although there are also some overlaps.

There is mandatory trading with the European Emissions Trading System EU ETS or the national Emissions Trading System nETS in Germany.

Voluntary emissions trading is largely used to compensate for greenhouse gas emissions that are difficult or impossible to avoid. These so-called Verified Emission Reductions (VER) are again divided into several standards and mechanisms, such as the Gold Standard, the Voluntary Carbon Standard, the Natural Forest Standard or the Clean Development Mechanism.

The prices for emission allowances from the EUA’s mandatory CO2 emissions trading have increased tenfold in just a few years. According to a study, the research company Bloomberg NEF has now determined that voluntary certificates could also become significantly more expensive and could reach three-digit prices in 2050.Is that “the next big thing” in environmental markets?

Due to the fact that the VERs have changed since the beginning of the CORSIA trading system for the aviation industry, in which 66 countries have been participating since 2021 and can use various certificates from the voluntary emissions trading market, the prices have already tripled in the past few months and it does not look like it expect this trend to reverse.

The market for European emission allowances has been weaker in the past week. On Monday, the high-volume EUA December future opened at EUR 86.12, but then gave way immediately and was only able to close above the EUR 82 mark again on Friday thanks to support from the energy markets. There was also news about the French energy supplier EDF that it could produce up to 60 TWh less nuclear power this year, which could then cause up to 20 million tons of CO2 more, since it would then have to be generated with coal and gas. Accordingly, the need for just as many EUAs would be necessary, which should not have a negative impact on price development.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)85.42 EUR82.03 EUR-3.39 EUR
EUA (December-2022-Future)85.15 EUR82.08 EUR-3.07 EUR
VCU (Voluntary Carbon Units ø)8.44 USD8.31 USD-0.13 USD
VER (Gold Standard Spotmarkt ø)8.36 USD8.37 USD+0.01 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)81.71 USD86.46 USD+4.75 USD
EURO (Currency, Forex)1.1362 USD1.1416 USD+0.0054 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. VCUs and VERs are average prices (CBL markets). 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