News

Dear Madam or Sir,

Last Tuesday, as part of the “Fit for 55” climate package, the European Parliament decided to end the combustion engine in 2035, despite resistance from the conservative camp. An important reason for this is the goal of reducing CO2 in road traffic by 55% for cars and delivery vans by 50% by 2030. Most manufacturers in Europe have already announced in the past few months that they will no longer produce cars with combustion engines by that time at the latest to produce.

However, it is still unclear whether combustion engines with e-fuels will also be recognized as climate-friendly in the future. From our point of view, this will not make any sense from a purely commercial and physical point of view, since the energy required for production only achieves a fifth of the range of electric cars.

At the same time, however, one must let the charging infrastructure growing much faster, because there are already not enough fast charging stations at peak times, especially on the motorways.

EU allowance prices have gained 3.5% over the past week and peaked at EUR 98.45 (EUA December 2023 futures) on Friday, which was also a new six-month high.

The relatively mild temperatures in large parts of Europe could have a negative impact on price developments in the coming week. On the other hand, it could appear bullish that only 9,166,500 EUAs will be auctioned this week, 2,676,000 fewer than last week. In addition, more purchases will be made in the coming weeks to meet the obligation to surrender, which speculators could also use to bring prices above the 100 Euro mark.

(Average Quotes Exchange / OTC)
Instrument	10/02/23	17/02/23	Change
EUA (Spot-Market)	91.76 EUR	95.02 EUR	+3.26 EUR
EUA (December-2023-Future)	93.03 EUR	96.25 EUR	+3.22 EUR
VCU (Voluntary Carbon Units ø)	4.05 USD	3.28 USD	-0.77 USD
VER (Gold Standard Spotmarkt ø)	2.37 USD	2.17 USD	-0.20 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	83.90 USD	83.00 USD	-0.90 USD
EURO (Currency, Forex)	1.0677 USD	1.0694 USD	-0.0017 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

Dear Madam or Sir,

As expected, both the EU parliamentary committee and the EU member states have passed the reform of the EU emissions trading system (EU ETS), which is why even more sectors and companies will be subject to the pricing of greenhouse gas emissions in the coming years.

Peter Liese, the responsible rapporteur in the Parliament of the European Union, speaks of a great success, as he announced on Twitter. Now the shipping, road transport and heating sectors are becoming a reality as part of the “Fit for 55” package. The goal here is to surpass the goal of reducing carbon emissions in the priced sectors by half until 2030.

Naturally, the latest steps don’t go far enough for environmental organizations, too far for some branches of industry and economists welcome the expansion of trade to other sectors.

And that’s not to be underestimated in the reform either – the revenue should also reduce the social consequences for low-income households by 65 to 86 billion euros in favour of the climate social fund.

This had no impact on the development of the price of EU emission allowances, as this has already been priced in by the market. The EUAs tended to move sideways and only lost slightly on a weekly closing price basis after the high price gains of the previous weeks.

Insofar as trading continues to be mainly technical this week, the price could move in the rough range between 91 and 98 euros, with the tendency being more sideways-upwards.

During this trading week, a total of 11,842,500 EUAs will be offered for auction on all five trading days at the Leipzig Energy Exchange EEX. Certificates from national emissions trading are also available this week on Tuesdays and Thursdays.

(Average Quotes Exchange / OTC)
Instrument	03/02/23	10/02/23	Change
EUA (Spot-Market)	91.87 EUR	91.76 EUR	-0.11 EUR
EUA (December-2023-Future)	93.29 EUR	93.03 EUR	-0.26 EUR
VCU (Voluntary Carbon Units ø)	2.60 USD	4.05 USD	+1.45 USD
VER (Gold Standard Spotmarkt ø)	2.54 USD	2.37 USD	-0.17 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	79.75 USD	83.90 USD	+4.15 USD
EURO (Currency, Forex)	1.0795 USD	1.0677 USD	-0.0118 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

Dear Madam or Sir,

Before the Federal Environment Agency (UBA) is due to publish the official estimate of emissions for 2022 in accordance with the Climate Protection Act next March, it was able to draw a statistical line under 2021 last week. The figures could be of great importance in the future, as it represents the last status before the turning point – provoked by Russia’s invasion of Ukraine.

It was expected that emissions would increase compared to 2020, as the pandemic-related restrictions no longer played a role. In fact, CO2-equivalent emissions in Germany rose by around 29.6 million tonnes, or 4%. The strongest increase was in energy supply, as there was already a trend towards increased coal-fired power generation in the second half of 2021. Emissions also increased in the industrial and traffic sectors compared to the previous year. Emissions from households and agriculture, on the other hand, decreased. In total, 759.1 million tonnes of CO2 equivalents were emitted in Germany in 2021, 39% less than in the reference year 1990. In this respect, therefore, the European emission reduction targets were fully met by Germany.

In the short period since the beginning of the new year, the price of European pollution rights has staged an astonishing rally, rising by around 20 euros and taking us very close to the 100-euro mark again. After the December contract reached a high of EUR 97.55 on Wednesday, a sideways – downward movement followed for the rest of the week in technically driven trading.

(Average Quotes Exchange / OTC)
Instrument	27/01/23	03/02/23	Change
EUA (Spot-Market)	87.76 EUR	91.87 EUR	+4.11 EUR
EUA (December-2023-Future)	89.23 EUR	93.29 EUR	+4.06 EUR
VCU (Voluntary Carbon Units ø)	2.39 USD	2.60 USD	+0.21 USD
VER (Gold Standard Spotmarkt ø)	2.53 USD	2.54 USD	+0.01 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	86.33 USD	79.75 USD	-6.58 USD
EURO (Currency, Forex)	1.0868 USD	1.0795 USD	-0.0073 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

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)
Instrument	20/01/23	27/01/23	Change
EUA (Spot-Market)	83.39 EUR	87.76 EUR	+4.37 EUR
EUA (December-2023-Future)	85.08 EUR	89.23 EUR	+4.20 EUR
VCU (Voluntary Carbon Units ø)	2.91 USD	2.39 USD	-0.52 USD
VER (Gold Standard Spotmarkt ø)	2.79 USD	2.53 USD	-0.26 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	87.71 USD	86.33 USD	-1.38 USD
EURO (Currency, Forex)	1.0855 USD	1.0868 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

Dear Madam or Sir,

One hears again and again that Germany and the EU are the only countries fighting for more global climate protection, followed by the argument that this is anti-business and that we alone cannot save the world. So today we bring a positive example from one of the most important oil-producing countries in the world.

The Abu Dhabi National Oil Company (ADNOC) is investing US$15 billion in carbon reduction projects by the end of this decade to reduce its own operational emissions and meet its own decarbonization goals.

In particular, carbon capture and storage (CCS) projects, new, cleaner energy solutions (hydrogen and renewable energies), further electrification of the company, measures to prevent routine gas flaring and the establishment of international partnerships for climate protection.

The United Arab Emirates (UAE) is committing a total of US$165 billion to the clean energy transition. They are the first Persian Gulf state to aim for net-zero emissions by 2050, a remarkable achievement for an oil state.

In addition, the AirCarbon Exchange (ACX) has partnered with the Abu Dhabi Global Market (ADGM) to create the world’s first carbon-neutral international financial hub and regulated trading venue for carbon credits. Among others, the Leipzig EEX is involved in the ACX. Advantag is also a commodity exchange member on the ACX, where tokenized trading for carbon emission certificates for international aviation (CORSIA) takes place.

On the market for EU emission allowances, EUAs continued to recover last week and gained 6.5% on a weekly closing basis. The main drivers were the cold temperatures in Central Europe, rising gas and oil prices and the breach of a technical resistance on Wednesday. It will be interesting to see if the EUAs will move further towards EUR 90 this week or if there will be some profit taking by speculative market participants.

This week sees the first auction of emissions allowances for the aviation industry this year; on Wednesday 775,500 EUAA are offered. On the other trading days of the week, a total of 9,166,500 EUAs are auctioned.

(Average Quotes Exchange / OTC)
Instrument	13/01/23	20/01/23	Change
EUA (Spot-Market)	78.09 EUR	83.39 EUR	+5.30 EUR
EUA (December-2023-Future)	79.86 EUR	85.08 EUR	+5.22 EUR
VCU (Voluntary Carbon Units ø)	2.80 USD	2.91 USD	+0.11 USD
VER (Gold Standard Spotmarkt ø)	2.89 USD	2.79 USD	-0.10 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	85.44 USD	87.71 USD	+2.27 USD
EURO (Currency, Forex)	1.0831 USD	1.0855 USD	+0.0024 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