Emissions Trading / Carbon Market News (31/10/2022)

Dear Madam or Sir,

Since Germany missed its climate targets in the years 2013 to 2020 in the sectors not yet included in EU emissions trading, it now has to buy a total of 11 million emission certificates from the states that have exceeded their greenhouse gas reduction targets. The failure to meet the target was especially evident in the building and transport sectors, for which the national German emissions trading system in accordance with the German Fuel Emissions Trading Act was introduced last year.

The states, which now generate proceeds from the sale of their emission rights, must now invest this in additional climate protection measures, as discussed by European State Secretary Sven Giegold (Greens). According to Giegold, these include electrically operated buses in Hungary, energy-efficient renovation of private homes in the Czech Republic, and schools and public buildings in Bulgaria.

The UN climate summit COP-27 (Conference Of Parties) for participants from 197 countries begins on Sunday in Sharm el-Sheikh, Egypt. The motto is “Together for a fair, ambitious implementation NOW”. This year’s target is to realize the Paris Climate Protection Agreement of 2015, the realization of annual climate financing of 100 billion US dollars for developing countries and more ambitious greenhouse gas reduction targets for the individual contracting states.

In the past week, EU emission allowances have increased massively, as many market participants have covered their short positions by buying (short covering). In addition, the gas price (natural gas) on the exchange has fallen to a level that is currently below that of October last year, as the EU gas storage facilities are now 93% full. As a result, participants in the gas market had to provide less margin and used the liquidity for purchases in the EU ETS.

On a weekly closing basis, Emission Allowances were up 17.5% to close at EUR 81.21 and shows their biggest weekly increase in more than five years.

This week, a total of 9,393,000 EUAs will be offered for auction in four auctions at the Leipzig EEX.

  (Average Quotes Exchange / OTC)   
EUA (Spot-Market)69.03 EUR81.16 EUR+12.13 EUR
EUA (December-2022-Future)69.10 EUR81.21 EUR+12.11 EUR
VCU (Voluntary Carbon Units ø)6.38 USD6.75 USD+0.37 USD
VER (Gold Standard Spotmarkt ø)3.20 USD3.36 USD+0.16 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)93.52 USD96.17 USD+2.65 USD
EURO (Currency, Forex)0.9862 USD0.9964 USD+0.0102 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