Emissions Trading / Carbon Market News (27/02/2023)

Dear Madam or Sir,

Last year, the Federal Republic of Germany auctioned a total of 217 million national emission allowances in accordance with the German Fuel Emissions Trading Act (BEHG) at the Leipzig EEX and thus generated income of around 6.4 billion euros.

The aim of the BEHG is to reduce greenhouse gas emissions in the transport and building sectors, since no reduction in emissions has been recorded here in recent years. It remains to be seen whether this will lead to measurable success in the area of transport and traffic, a speed limit on German autobahns would certainly be easier to implement.

According to the ideas of the EU Parliament, around 45% of the buildings in the building sector should be renovated by 2033. A real estate industry association has calculated that this would mean up to 182 billion euros per year for Germany alone. According to the association, this is illusory, as is the 30% of building renovations proposed by the EU Commission.

From our point of view, the state is called upon to set up new subsidy programs, especially for buildings in administration, in the education and health sector as well as for industry and trade. Because the renovation of an average university hospital alone would be equivalent to the renovation of an entire small town and could be monitored much more easily.

In the European emissions trading EU ETS, the current EUA benchmark contract December 2023 broke through the mark of 100 euros as a benchmark for the first time last Tuesday and was also able to break through into the three-digit range on Wednesday and Friday. On Tuesday, the EUAs also closed above the 100 mark. On Friday, an attempt to stay above the psychological 100 level failed and carbon certificates ended last week’s trading week at 97.39, still up more than 1% on the weekly basis.

It remains to be seen whether the EUAs can continue to follow the previous sideways-up trend, or whether this support line will be broken down for speculative profit-taking. This might be a good time to make compliance purchases for plant operators. In recent years, it has often been the case that prices have tended to be rather bullish until the end of the compliance deadline.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)95.02 EUR96.36 EUR+1.34 EUR
EUA (December-2023-Future)96.25 EUR97.39 EUR+1.14 EUR
VCU (Voluntary Carbon Units ø)3.28 USD4.00 USD+0.72 USD
VER (Gold Standard Spotmarkt ø)2.17 USD2.47 USD+0.30 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)83.00 USD83.29 USD+0.29 USD
EURO (Currency, Forex)1.0694 USD1.0545 USD-0.0149 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