Emissions Trading / Carbon Market News (29/08/2022)

Dear Madam or Sir,

one thing is certain – the year 2022 has the potential to show those with political responsibility what the consequences of unchecked climate change will be.

In addition to the drought in large parts of Europe, China is also affected by an extreme drought, which is associated with the longest heat wave since weather records. As a result, China’s largest freshwater lake, the Poyang, is in danger of drying up and many rivers are drying up as well. The power supply from hydropower has fallen by more than half and the industry is now suffering from energy shortages in the wake of Covid, with electricity already being rationed in some provinces. The consequences for the global economy in times of Corona and the Ukraine war are already noticeable.

The decline in greenhouse-gas emissions in the EU over the last three decades, which is around a third or 1.55 billion tons of greenhouse-gases, shows that European climate policy is bearing fruit.

Since three quarters of all man-made carbon emissions result from the burning of fossil fuels, the use of renewable energies in industry and buildings and the use of alternative drives in the transport and traffic sector is of crucial importance for global greenhouse gas reduction.

In a few years it will become clear whether the current trouble spots, such as the Ukraine war and the drought catastrophes in large parts of the world, are accelerating the shift towards global decarbonisation, or whether the burning of coal is to be stopped for temporary reasons of convenience and political intransigence as the most climate-damaging energy source, is not immediately reduced as soon as the energy crisis makes this possible.

Exchange-traded electricity prices on the spot and futures markets are currently climbing to alarming levels in Central Europe. The prices have meanwhile broken through the mark of 700 euros / MWh on the spot market and have therefore increased within a few months. On the derivatives market, the price of 1,000 euros / MWh for the EEX Phelix DE peak load Cal-2023 has already fallen.

Emission rights, which carried out the scenario of a correction below the 90-euro mark that we assessed as possible in the last market report, have decoupled from this in the past trading week. Should the price hold the support in the area of approx. EUR 88, a course above the EUR 90 mark would be the most likely possibility in the new week.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)97:82 EUR90:03 EUR-7:79 EUR
EUA (December-2022-Future)98:01 EUR90:31 EUR-7:70 EUR
VCU (Voluntary Carbon Units ø)8:36 USD9:56 USD+1:20 USD
VER (Gold Standard Spotmarkt ø)4:09 USD4:21 USD+0:12 USD
nEZ (German National Carbon Units)30:00 EUR30:00 EUR+0:00 EUR
ICE Brent Crude Oil (Benchmark Future)95:71 USD100:82 USD+5:11 USD
EURO (Currency, Forex)1:0202 USD0:9965 USD-0:0237 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