Emissions Trading / Carbon Market News (19/09/2022)

Ladies and Gentlemen

In November, the UN world climate summit COP27 will take place in Sharm El-Sheikh, Egypt. In the run-up to this event, more than 530 of the world’s largest institutional investors have joined forces and urge the governments of all countries to take much faster and more effective action against the global climate crisis.

Since these mostly Asian, American and European institutional investors manage assets totalling a good 40 trillion US dollars, their influence should not be underestimated.

In particular, five measures to be implemented in the short term are required to limit climate change to a maximum increase of 1.5°C in accordance with the Paris Climate Protection Agreement.

Governments should ensure that greenhouse gases other than CO2, such as methane, are reduced by at least 30% compared to 2020, in accordance with the “Global Methane Pledge”. In addition, both state and private investments are to be steered significantly more towards climate-friendly investments and disclosure requirements regarding the effects on the climate for investments are to be resolved. Here, climate protection investments in developing countries are to be given increased attention.

The investors jointly demand to be aware of the urgency of the moment and to achieve the decarbonization of the global economy by 2050, with the phasing out of fossil fuels being the priority.

But it is not the sudden morale of capital that drives these investors, but the fear that the consequences of climate change will melt away the considerable fortunes and also the prosperity of rich regions, like the glaciers in the Alps.

What’s particularly ironic about the story is that a large part of these same fortunes have been made from fossil fuels. Still, $40 trillion is a powerful argument to help turn things around.

After the bears had the upper hand on the market for European Emission Allowances for three weeks, the bulls had fodder again last Monday after EU climate chief Frans Timmermann clearly rejected ideas for a price cap for emission allowances. On Friday, the EUAs rose again after a strong auction and marked the weekly high at just under 74 euros, before the pollution rights said goodbye to the weekend with an increase of nearly 11%.

A total of 10,323,000 EUAs will be auctioned at EEX Leipzig this week, with 929,000 EUAs coming from a rare Northern Irish primary market auction this Wednesday.

In addition, the last auctions for 2021 National Emission Certificates (nEZ) will take place next Tuesday and Thursday, so that the delivery can still be made in time to the accounts of the companies subject to the compliance duty. The submission deadline for 2021 ends on Friday, September 30th, 2022 in Germany’s National Emissions Trading System; the last day to purchase 2021 or 2022 nEZ for the purpose of the tax obligation is 22/09/2022.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)65.90 EUR73.08 EUR+7.18 EUR
EUA (December-2022-Future)66.08 EUR73.27 EUR+7.19 EUR
VCU (Voluntary Carbon Units ø)8.96 USD9.42 USD+0.46 USD
VER (Gold Standard Spotmarkt ø)4.10 USD4.18 USD+0.08 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)92.10 USD91.46 USD-0.64 USD
EURO (Currency, Forex)1.0041 USD1.0014 USD-0.0027 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