Emissions Trading / Carbon Market News (2017-06-06)

Dear Ladies and Gentlemen,

Once again, the carbon market news have to deal with Donald Trump. The US President announced last Thursday that the world’s biggest economy will leave the Paris Climate Protection Agreement. Thus, Trump has delivered on his electoral promise to the strongholds of coal production like Pennsylvania or West Virginia. Therefore, when signing the decree, he sent some miners symbolically back to work. But once again, his already infamous tunnel vision does not allow him to recognize the meaninglessness of this project. The decline in coal production in the USA is by no means due to the Paris climate protection agreement, but to purely market-based mechanisms. Coal consumption has fallen to its lowest level in the past 40 years, mainly due to cheaper alternatives such as natural gas and the use of energy-saving technologies. These facts – not “fake news” – will soon be noticed by then extremely disappointed miners.

However, another issue of far greater importance for trade in European pollution rights was the question, how other major industrial nations would react on the withdrawal of the US from the climate treaty? Would they follow the example, thereby undermining the historic agreement? The slightly unsettled CO2 market reacted logically with price drops and recorded a short-term low of 4.99 EUR on Friday in early trading.

However, the prompt unanimous, international response caused the traders to breathe a sigh of relief. Germany, France, Italy, and even China, or the United Kingdom, which is closely allied to the United States, unequivocally criticized Trumps’ decision and announced an uncompromising adherence to the agreed climate goals. Now the strong man in the White House stood once more like a naive child holding his hands in front of his eyes, believing that it was not seen anymore.

Only the oil price reacted significantly to the decision from Washington. In the opinion of commodity experts, there is an expectation on the market that oil production in the USA will rise further. As a result, the price on Friday fell below the important 50 dollar mark.


(Average Quotes Exchange / OTC)      
Instrument 2017-06-05 2017-05-26 Change
EUA (Spotmarket) 5.17 EUR 5.19 EUR -0.02 EUR
EUA (December-2017-Future) 5.17 EUR 5.19 EUR -0.02 EUR
CER (Spotmarket) 0.21 EUR 0.22 EUR -0.01 EUR
ICE Brent Crude Oil (Benchmark Future) 49.42 USD 52.47 USD -3.05 USD
EURO (Currency, Forex) 1.1257 USD 1.1182 USD +0.0075 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 have usually in Spot Market a visible spread. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into EUA. Crude Oil and Euro Currency shows day-end-exchange quotes. These 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.)

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