Emissions Trading / Carbon Market News (18/07/2022)

Dear Madam or Sir,

Climate change is leading to major problems in Europe this summer. In the past few weeks, southern Europe has been hit by an exceptional heat wave with temperatures around 40°C and drought, with Italy, Spain and Portugal leading the way. This led to forest fires in many places, which are difficult to contain due to the hot and dry wind and spread quickly.

Northern Italy has been in a state of emergency for weeks, as one heat wave follows the next and there is no precipitation. There is a visible lack of water in Lake Maggiore and at Lake Garda and the first regions have already restricted the consumption of drinking water, such as Milan, Venice and Verona. In the Po Valley, 30 percent of all Italian agricultural production is threatened this year and the region is experiencing its worst drought in 70 years. In addition to the Ukraine war, this is likely to have a further impact on the already high global food prices.

This week, the heat wave is also coming to Germany, with temperatures of almost 40°C, where there is already a water shortage in many regions and the risk of forest fires is increasing day by day. Great Britain meanwhile fears temperature records of around 40°C this week.

The 13th Petersberg Climate Dialogue has been taking place since yesterday and will be attended by around 40 ministers from a wide variety of countries. This year it is taking place at the German Federal Foreign Office and is being hosted by Germany and Egypt, where the World Climate Conference (COP27) will take place in autumn. It remains to be seen whether there will be significant results at a time when coal-fired power generation is supposed to secure Germany’s energy supply.

The market for European carbon emission allowances last week recouped the losses of the previous week and the EUA closed above the 85-euro mark with continued low volatility. The price gains were accompanied by a euro, which briefly traded below the US$ 1 mark at 0.9951 last Thursday, and an oil price (Brent variety), which marked a short-term low of under US$ 96, a price that was last seen in February. The euro is still under pressure on energy supply risks and oil fell sharply after the US suggested a maximum price for Russian Ural oil in a range of US$ 40 – US$ 60 per barrel.

In this trading week there is once again the full volume of a total of 11.5 million EUAs, which are auctioned at the European Energy Exchange on all five trading days. In the next week there will then be 8.8 million EUAs before the annual halving of the auction volume occurs in August and alternately 5.7 million or 4.4 million EUAs are offered for auction.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)82.55 EUR82.55 EUR+2.61 EUR
EUA (December-2022-Future)82.79 EUR82.79 EUR+2.59 EUR
VCU (Voluntary Carbon Units ø)8.83 USD8.83 USD-0.20 USD
VER (Gold Standard Spotmarkt ø)3.96 USD3.96 USD-0.22 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)107.05 USD107.05 USD-6.06 USD
EURO (Currency, Forex)1.0182 USD1.0182 USD-0.0118 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