Emissions Trading / Carbon Market News (30/01/2023)

Dear Madam or Sir,

The market for voluntary offsetting of greenhouse gas emissions grew by US$ 3 billion to about US$ 10 billion last year.

This was mainly due to the price increase, as the number of certificates used in particular by companies and individuals for compensation fell by 4% to 155 million. Bloomberg has now worked out three scenarios for possible price developments.

Scenario number one allows companies to choose any type of carbon reduction project, whereby in 2050 around 5.4 billion allowances would be demanded with an oversupply of 8 billion carbon credits, especially from REDD+ projects to avoid deforestation. The average price development would only rise to US$ 12.00 by 2030 and to US$ 35.00 per CO2 certificate by 2050. The total market would only increase to 15 billion US dollars annually by 2030.

In the second scenario, only carbon credits from projects that actually remove greenhouse gases from the atmosphere are allowed. Projects from avoided deforestation would not be part of the use here, for example. The supply will be tighter by 2037 and prices will rise to US$ 250 per tonne, but due to newly developed technologies for removing greenhouse-gases from the atmosphere, they will drop again to US$ 100 by 2050, but the global market volume would still be around US$ 1 trillion.

In the third scenario, there is a mix of high-value and low-value carbon credits. A price of US$ 32 was determined here for the high-quality for 2050, the lower-value ones were calculated at US$ 22. In this scenario, the demand for high-quality projects will amount to 433 million certificates in 2050, which, according to Bloomberg’s analysis, will amount to 1.3 billion CO2 certificates for lower standard certificates. A further improvement in the standardization of certificates in the voluntary compensation market is certainly not disadvantageous.

The much more transparent prices of the EU emissions trading have set course for the EUR 90 mark in the past week and marked an annual high of EUR 90.73 in the December 2023 benchmark contract, which corresponds exactly to the resistance from a sideways-downward trend line. If profit-taking sets in, the EUA could also move back into the EUR 85.00 area, if it breaks the aforementioned resistance, a path to just below the all-time high is technically conceivable.

This week, 11,842,500 EUAs find their way to the EEX auction on all five trading days, since the Polish auction, which takes place every two weeks, is held on Wednesday.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)83.39 EUR87.76 EUR+4.37 EUR
EUA (December-2023-Future)85.08 EUR89.23 EUR+4.20 EUR
VCU (Voluntary Carbon Units ø)2.91 USD2.39 USD-0.52 USD
VER (Gold Standard Spotmarkt ø)2.79 USD2.53 USD-0.26 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)87.71 USD86.33 USD-1.38 USD
EURO (Currency, Forex)1.0855 USD1.0868 USD+0.0013 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