Dear Madam or Sir,

there is news related to global warming that you first must get used to. This includes, for example, an official curfew because it is raining. In summer, in Spain. An indefinite curfew was imposed yesterday for around 10,000 people in the Catalan municipality of Alcanar in the north-east of the country because of the risk of severe flooding. The population was advised to go to the upper floors of their houses if possible. Within only 24 hours, 215 litres of rain per square metre had fallen in Alcanar.

In Germany, the gap in the reduction of climate-damaging greenhouse gases, which the Federal Environment Agency (UBA) put at up to 331 million tonnes of CO2 equivalents in its projection report, could amount to “only” slightly 200 million tonnes in the best case, but only if the German government also consistently implements all the climate precautions adopted and planned by October 2022. These projections refer to Germany’s targets set out in the Climate Act.

However, there is a second gap, to which the Frankfurter Allgemeine drew attention last week. In addition to the national reduction targets, the states of the European Union have, as is well-known, approved to reduce their carbon emissions as a community by 55 percent until 2030. To this end, the EU states agreed, among other things, on the Effort Sharing Regulation (ESR). This regulation primarily covers the main polluters of emissions, namely transport and the building sector. It stipulates that large emitters like Germany must reduce their emissions from 2021 to 2030 by half. If an EU state fails to do so, it must buy emission allowances on the market. If these are not sufficiently available, penalties can be imposed. In relation to Germany, this means – with a projected gap of at least 152 million tonnes of CO2 – compensation payments in the double-digit billions.

To still meet the climate targets, the UBA and other experts called for, among other measures, a significant price increase for national emission certificates for fuels used in transport and buildings (nEZ). In a paper published in July, the UBA proposed raising the price of nEZ to 90 euros as early as next year. In more recent reports, a price of 200 euros per tonne is even assumed from 2025, in another it is 255 euros from 2027.

But whatever measures are taken to narrow the huge emissions reduction gap, they must be recognisably socially cushioned. And the earlier and more consistently this is started, the smaller the financial pressure wave that will come our way – not to mention the impact on our environment.

With the beginning of September, the period with reduced auction volumes ended last Friday. But this circumstance did not trigger any reaction on the European carbon market. In a flat range of about 3 euros, the price moved uninspired along the 86-euro mark. Now that most traders are returning to their desks, it will be interesting to see in which direction the market will break out of the narrowing price corridor.

(Average Quotes Exchange / OTC)
Instrument	25/08/23	01/09/23	Change
EUA (Spot-Market)	84.55 EUR	84.43 EUR	-0.12 EUR
EUA (December-2023-Future)	85.39 EUR	85.27 EUR	-0.12 EUR
VER (Natural Carbon Offsets)	1.65 USD	1.98 USD	+0.33 USD
VER (CORSIA eligible Carbon Offsets)	0.85 USD	0.87 USD	+0.02 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	84.61 USD	88.84 USD	+4.23 USD
EURO (Currency, Forex)	1.0798 USD	1.0785 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,

Climate change, with its many manifestations, has led to sad records in forest fires over the past week. Greek Citizen Protection Minister Vassilis Kikilias, for example, complained at a press conference that it was “the worst summer since records began.” According to the EU Commission, the fires near the northeastern port city of Alexandroupolis are in fact the largest fires in the history of the European Union. More than 73,000 hectares have already been burnt, the Commissioner for Humanitarian Aid and Crisis Management, Janez Lenarcic, announced.

But this fire is almost nothing compared to the fires in Canada. This year, fires in Canada have already destroyed an area larger than the total area of Greece.

Another example is currently being provided by the Panama Canal, where a persistent drought is significantly restricting traffic on the waterway and will continue to do so for the next few months. Numerous freighters must wait for their passage, and an imposing shipping congestion is already forming in front of the trade passage. This is causing supply chains worldwide to come to a standstill.

It sounds somewhat perplexing when, at the same time, the current projection report of the Federal Environment Agency takes place and concludes that the German government’s planned new climate protection measures could leave a gap of up to 331 million tonnes in the reduction of climate-damaging greenhouse gases by 2030. The goal of making Germany climate-neutral by 2045 would not be achieved under the given circumstances, writes the Federal Environment Agency.

After harsh criticism, also from the scientific community, of the new version of the Climate Protection Act, a broad alliance of 42 associations called on the government to take immediate action to “achieve the German climate targets by 2030”. A “socially just implementation of the transformation” was also important, the joint statement said.

However, the Süddeutsche Zeitung also had something positive to report on Thursday. According to it, the net operator Tennet has closed a gap in the electricity axis from northern Germany to the south. On Wednesday, a new high-voltage line between Ganderkesee (Oldenburg district) and St. Hülfe (Diepholz) was put into operation, closing an important connection between the North Sea and North Rhine-Westphalia, as the company announced on the commissioning. As a result, more wind power can now be fed into the grid and directed southwards, thus significantly reducing the shutdown of wind turbines. In total, the line can transmit 3.3 gigawatts of electricity from the coast to the south. This corresponds to the output of two large power plants.

This means that NRW as an industrial region will be supplied with more green electricity, which could also take place in the production of green hydrogen.

The market for European emission allowances was extremely volatile last week, with a price range of around six euros. The December contract briefly exceeded the 90-euro mark at its high.

After the announcement of the agreement in the dispute over wages and working conditions at three liquefied natural gas terminals in Australia, quotations for natural gas fell rapidly and dragged the EUA down. After hitting a two-week low on Friday morning, European carbon prices reversed direction as, on the one hand, energy prices also rose again and, on the other, one of the best auction results this year encouraged traders with short positions to take profits.

(Average Quotes Exchange / OTC)
Instrument	18/08/23	25/08/23	Change
EUA (Spot-Market)	87.18 EUR	84.55 EUR	-2.63 EUR
EUA (December-2023-Future)	88.01 EUR	85.39 EUR	-2.62 EUR
VER (Natural Carbon Offsets)	1.58 USD	1.65 USD	+0.07 USD
VER (CORSIA eligible Carbon Offsets)	0.73 USD	0.85 USD	+0.12 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	84.75 USD	84.61 USD	-0.14 USD
EURO (Currency, Forex)	1.0870 USD	1.0798 USD	-0.0072 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,

Last week, the EU presented the report on the development of greenhouse gas emissions in the EU, which are emitted by companies and households.

According to this, a total of 941 million tons of CO2 or its equivalent in other greenhouse gases (CO2e) were emitted in the first quarter of 2023. Compared to the same period in 2022, this is a drop of a good three percent. In the first quarter of 2010 it was still 1,172 tons, since then total emissions in the EU have been falling steadily, with EU emissions trading system making an outstanding contribution.

Households were the biggest sources of emissions at 24%, followed by the manufacturing sector at 20%, energy supply at 19% and agriculture at 13%. In the transport sector, emissions rose to 10%, which is why further measures are required here in particular.

In the past exchange trading week, the EU emission allowances again increased by 1.5% on a weekly closing price basis and closed between the 38-day line (EUR 88.42) and the 200-day line (EUR 86.61) at EUR 88.01 for the December-2023-Future. A breakout towards the EUR 90 mark followed on Thursday, but this was short-lived.

This week the auction volume at the Leipzig EEX has still been halved again with a total of 4,963,000 EUAs over four trading days. From Friday next week, the regular offer will start again at the beginning of September.

(Average Quotes Exchange / OTC)
Instrument	11/08/23	18/08/23	Change
EUA (Spot-Market)	85.88 EUR	87.18 EUR	+1.30 EUR
EUA (December-2023-Future)	86.73 EUR	88.01 EUR	+1.28 EUR
VER (Natural Carbon Offsets)	1.80 USD	1.58 USD	-0.22 USD
VER (CORSIA eligible Carbon Offsets)	0.93 USD	0.73 USD	-0.20 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	86.57 USD	84.75 USD	-1.82 USD
EURO (Currency, Forex)	1.0946 USD	1.0870 USD	-0.0076 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,

Last week, the German federal government approved the draft economic plan for the “Climate and Transformation Fund” for the years 2024 to 2027.

The fund is said to have a total volume of 57.6 billion euros and will accelerate decarbonization in Germany by investing almost 19 billion in the renovation of buildings, 12.5 billion in Deutsche Bahn, 12.6 billion in renewable energies. Electromobility along with charging infrastructure, will be funded with a good 5 billion euros. In addition, the development of the hydrogen industry and the semiconductor industry should each receive around 4 billion in funding. Almost 21.6 billion are to be made available for the overall measures in the coming year.

However, since the federal government also needs income for this, the price for national emission certificates is to rise next year by 10 euros to 40 euros and not, as originally planned, to 45 euros per tonne of CO2. In 2025, the prices for the national emission certificates will then increase to 55 euros and in 2026 to 65 euros according to the current timetable.

But not only Germany has special national rules for emitters, Hungary has now also passed a national resolution in the form of a decree on the subject of carbon emissions trading. From this month, participants in the EU emissions trading scheme EU-ETS are to pay a levy of EUR 40 per tonne of CO2e and a transaction tax of 10% for all emission allowances allocated free of charge if they sell these free emission allowances before the end of each year compliance period ending April.

The prices in the EU ETS increased at the end of the past trading week and, based on the weekly closing prices, recorded an increase of a good 3.7%. Until the end of the month the auction volumes have been halved and with the EUAs trading above the 200-day moving average again it will be interesting to see whether the demand for EUAs at the auctions continues to increase.

(Average Quotes Exchange / OTC)
Instrument	04/08/23	11/08/23	Change
EUA (Spot-Market)	82.74 EUR	85:88 EUR	+3.14 EUR
EUA (December-2023-Future)	83.65 EUR	86.73 EUR	+3.08 EUR
VER (Natural Carbon Offsets)	1.90 USD	1.80 USD	-0.10 USD
VER (CORSIA eligible Carbon Offsets)	0.97 USD	0.93 USD	-0.08 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	86.02 USD	86.57 USD	+0.55 USD
EURO (Currency, Forex)	1.1010 USD	1.0946 USD	-0.0064 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,

A research team from the Swiss Federal Research Institute for Forest, Snow and Landscape (WSL) has looked at the temperature development over the last 1,200 years and, using 50 million cells from the annual rings of 188 Scandinavian Scots pines, has provided evidence that the current global warming is unprecedented, as they have now published in the journal “Nature”.

Sceptics of human-caused climate change keep referring to the medieval warm period. The team led by study leader Georg von Arx has now refuted claims that the current global warming could be caused by natural fluctuations. The research results show higher temperatures for the years from 850 to 1100 than in the following centuries, but these were significantly below the current temperatures.

Future studies should now also use this method to show the climatic development in other parts of the world, especially in the southern hemisphere.

The fight against climate change is now being waged in Europe and large parts of the world using market-based instruments. In the first half of 2023, Germany alone received almost four billion euros by issuing carbon emission allowances in the European emissions trading system and national emissions trading. This money is used to promote climate protection measures and green technologies.

In the first six months of the year, around 600 million euros were earned in the German national emissions trading system, compared to 650 million euros in the same period of the previous year. The total revenue from national emissions trading system last year was 6.4 billion euros. In 2023, the German Emissions Trading Authority expects total revenues of 6.8 billion euros, which shows that almost 90% of purchases in the second half of the year will be made by those who place fossil fuels on the market.

And this year, the companies that are obliged to participate in national emissions trading should calculate particularly precisely, since the price of the certificates could not only increase by 17% to 35 euros per national emission certificate, but possibly by 50% to 45 euros if the draft of the budget financing law is drafted accordingly should be decided. Only 10% of the certificates held as of 31.12. of the year on the registry account can still be purchased at the EEX in the following year at the old price. On the secondary market, too, the prices for 2023 nEZ will be above the current issue price of 30 euros in the coming year.

In the past week, the prices for emission allowances in the European emissions trading system have fallen further and lost almost 6% on a weekly closing basis.

Due to the missing Polish auction, which takes place every two weeks on Wednesday, only 4,957,000 EUAs will be auctioned on the EEX this week, which is currently one of the few bullish indicators, along with temperatures that are expected to rise again in parts of Europe.

(Average Quotes Exchange / OTC)
Instrument	28/07/23	04/08/23	Change
EUA (Spot-Market)	87.75 EUR	82.74 EUR	-5.01 EUR
EUA (December-2023-Future)	88.68 EUR	83.65 EUR	-5.03 EUR
VER (Natural Carbon Offsets)	1.93 USD	1.90 USD	-0.03 USD
VER (CORSIA eligible Carbon Offsets)	1.05 USD	0.97 USD	-0.08 USD
nEZ (German National Carbon Units)	30.00 EUR	30.00 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	84.80 USD	86.02 USD	+1.22 USD
EURO (Currency, Forex)	1.1015 USD	1.1010 USD	+0.0005 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