Emissions Trading / Carbon Market News (21/02/2022)

Dear Madam or Sir,

The storms Ylenia, Zeynep and Antonia caused a lot of human and material damage in Europe. According to an initial estimate, insured losses of EUR 900 million were caused by Zeynep in Germany and the losses insured by Ylenia also amount to at least EUR 500 million. Together with Antonia, who crossed us last night, the financial impact is well into the billions.

The new week will probably bring still a lot of wind, especially in northern Germany. Accordingly, more than 60% of Germany’s energy production was secured by wind energy yesterday afternoon. A total of 79% was generated from renewable sources, reducing carbon emissions per kWh to 141 grams. Coal accounted for only 10% of the energy mix and natural gas for less than 5%.

The prices for carbon emission allowances in Europe fell not only because of the lower demand in the energy sector and the ongoing Ukraine crisis, but also because Peter Liese, who sits for the German conservative party CDU and member of the European People’s Party in the EU Parliaments environment committee, had concerns about the strong price increase for European emission allowances (EUA). He therefore suggested that, in line with the market stability reserve introduced a few years ago, the auctioning of additional emission allowances should be made easier, but he wanted to prevent greater price volatility and a corresponding price collapse.

Currently, the regulations of the EU ETS allow further EUAs to be auctioned under certain circumstances, including if the carbon price is three times the average price of the last two previous years for at least 6 months. Some EU parliamentarians had now expressed ideas about releasing a further 100 million CO2 certificates from their “market stability reserve” if the CO2 price was twice as high as the average price in the two previous years for at least 6 months.

However, since everything takes a while with the bureaucracy monster EU, the concrete proposals are to be discussed in June and it cannot be assumed that any concrete measures will be drafted before the summer break.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)92.45 EUR89.05 EUR-3.40 EUR
EUA (December-2022-Future)92.87 EUR89.47 EUR-3.40 EUR
VCU (Voluntary Carbon Units ø)10.02 USD10.77 USD+0.75 USD
VER (Gold Standard Spotmarkt ø)9.00 USD9.00 USD+0.00 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)94.86 USD91.17 USD-3.69 USD
EURO (Currency, Forex)1.1352 USD1.1319 USD-0.0033 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