Emissions Trading / Carbon Market News (27/12/2023)

Dear Madam or Sir,

With a gross domestic product of almost 800 billion euros, North Rhine-Westphalia is not only the economically largest German federal state, but with more than 18 million inhabitants it is also by far the most populous, even though in terms of area it is only fourth after Bavaria, Lower Saxony and Baden-Wurttemberg.

The black-green state government under Prime Minister Hendrik Wust has now decided on requirements for renewable energies, which will come into force next year. From 2024, builders of non-residential buildings will be obliged to equip their properties with photovoltaic systems. From 2025 this will apply to all types of buildings. From 2026, the obligation for solar systems will also extend to the renovation of building roofs.

It is well known that the pricing of CO2 emissions in Germany will be significantly more expensive for tenants and owners in the coming year. Since these are net prices, VAT is of course added to the prices. Accordingly, one ton of CO2 currently costs consumers EUR 35.70, and from January 2024 it will cost EUR 53.55. In addition, the reduced VAT on natural gas and liquid gas is expected to rise again from 7% to 19% from February 29, 2024.

Regardless of VAT, the annual costs for a single-family home with a consumption of 20,000 KWh of natural gas will rise from EUR 130.00 to EUR 194.00 in the coming year due to the national emission allowances. For 2,000 liters of heating oil the costs rise from currently EUR 172.00 to EUR 258.00 and for 1,400 kg of liquid gas from EUR 172.00 to EUR 227.00. And there is no provision in the federal budget for the climate money announced before the election to be paid out to citizens.

After several bearish months, emissions allowances in the EU emissions trading system (EU ETS) rose significantly last week by 14% compared to the previous weekly closing price. In addition, the December 2023 contract has expired, which is why December 2024 is now the benchmark contract for the EUAs, on which the price development on the spot market is also based.

Last Thursday, the new 2024 auction calendar for the EU ETS was published by EEX. Accordingly, the first auction starts in the 3rd calendar week on January 15, 2024 with a total volume of 13,404,500 EUAs on all five trading days.

We are of course also at your disposal during this trading week.

    (Average Quotes Exchange / OTC)       
EUA (December-2023-Future)69.22 EUR78.90 EUR+9.68 EUR
VER (Natural Carbon Offsets)0.37 USD1.04 USD+0.69 USD
VER (CORSIA eligible Carbon Offsets)0.58 USD0.74 USD+0.16 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)77.01 USD78.94 USD+1.93 USD
EURO (Currency, Forex)1.0892 USD1.1007 USD+0.0115 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. EUA, 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