Emissions Trading / Carbon Market News (23/12/2019)

Dear Madam or Sir,

The new elections in Great Britain have now accelerated the former “infinite history” of Brexit to the maximum. Last week, the British Parliament approved the Brexit law and there is little doubt that the EU Parliament will shortly agree to the negotiated deal. This would finally put an end to all horror scenarios of an unregulated exit, but by no means all uncertainties have been resolved. Because the exit contract regulates the procedures for the separation, but not the basis for future relationships.

And this also affects the emissions trading system. There are of course working papers on the future direction, but far from a decision as to how the British will proceed with regard to CO2 pricing. Some experts predict a CO2 tax here, but there are also considerations regarding their own British trading system. This could then be linked to the European ETS and / or other systems. However, it is also still possible for Great Britain to remain in the ETS as a non-EU country, either until the end of the third trading period on December 31, 2020, or even, if legal requirements are implemented, even beyond.

With all these considerations in mind, the relevant question is floating around, what will become of the marked British EUAs, which were not auctioned in 2019 due to the risk of an unregulated Brexit. There are an estimated 120 to 150 million EUAs that could possibly still flow into the market. However, there is still no final clarity here. If, for example, they came onto the market in weekly auctions over 2020, that would roughly mean three million certificates per week.

The auction-free winter break began on Tuesday of the last trading week and the market reacted with an extremely significant price increase. From its lowest point on Monday, the price rose unstoppably and, after a short breather on Friday, passed the € 27 mark early this morning.

(Durchschnittliche Börsenkurse / OTC)      
Instrument 13/12/19 20/12/19 Veränderung
EUA (Spotmarket) 24.01 EUR 26.58 EUR +2.57 EUR
EUA (Dezember-2020-Future) 24.02 EUR 26,67 EUR +2.65 EUR
CER (Spotmarket) 0.20 EUR 0.22 EUR +0.02 EUR
ICE Brent Crude Oil (Benchmark Future) 64.93 USD 65.13 USD +0.20 USD
EURO (Currency, Forex) 1.1120 USD 1.1078 USD -0.0042 USD

(The average market prices and OTC prices show the respective mean of supply and demand of different trading venues for CO2 emission rights. Bid and ask usually deviate from the mean by several cents. Crude oil and euros show closing prices. The CER prices are CP2 -CERs, which can be used within the framework of the EU-ETS. Our market reports are not recommendations for trading emission rights or their derivatives and are for information purposes only. If you no longer wish to receive the newsletter, please send a short message to Sender.) 

Our trader team will be happy to answer any questions you may have.

Sincerely yours, 

Advantag Services GmbH