Emissions Trading / Carbon Market News (24/04/2023)

Dear Madam or Sir,

11 years ago, we brought up the idea of an import tax on products and services (Carbon Import Tax) in our market report as a possible solution to reduce distortions of competition for European producers and service providers.

Ultimately, the European Union has now implemented this idea and calls it the Carbon Border Adjustment Mechanism, or CBAM for short. Exact details of the implementation are still unclear, but the import of products from countries that do not have sufficient pricing of greenhouse gases will be subject to corresponding penalty taxes.

In addition, the inclusion of shipping from next year, the Europe-wide pricing of the transport and building sectors and process heat in small industry in EU emissions trading were finally approved last Monday. A time-limited upper limit of 45 euros per ton of CO2 should apply here, but it is currently questionable how this should actually be implemented, since it should ultimately remain a market economy mechanism.

Furthermore, a climate social fund of 65 billion euros is to be financed from the income from CO2 pricing, which is intended to cushion social hardship for households with low incomes.

This was all expected by the market. In addition, the number of buyers from companies subject to the compliance duties in EU emissions trading decreased, so that demand for European emission allowances continued to fall in the past week. The prices of the EUAs also fell in the last week and the emission certificates lost more than 4% on a weekly closing basis.

This week, a total of 11,842,500 EUAs will be auctioned on all five trading days at the Leipzig Energy Exchange EEX. In the next week, however, it will only be 6,757,000 due to the public holiday and the lack of a scheduled auction in Poland.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)92.34 EUR88.25 EUR-4.09 EUR
EUA (December-2023-Future)93.84 EUR89.72 EUR-4.12 EUR
VER (Natural Carbon Offsets)2.76 USD2.63 USD-0.13 USD
VER (CORISA eligible Carbon Offsets)1.77 USD1.69 USD-0.08 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)86.46 USD81.77 USD-4.69 USD
EURO (Currency, Forex)1.0994 USD1.0990 USD-0.0004 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