Emissions Trading / Carbon Market News (15/01/2023)

Dear Madam or Sir,

Following several earthquakes, a volcano has erupted in Iceland for the second time in two weeks, emitting large quantities of dust, ash and lava as well as CO2.

Over the past millions of years, volcanoes have ensured that there is sufficient CO2 in the atmosphere to prevent the heat from the sun’s rays in the atmosphere from being quickly reflected back into space, thus creating temperatures conducive to life.

Deniers of human-made climate change like to point this out while ignoring the fact that humans currently emit 100 times more greenhouse gases into the atmosphere each year than all volcanic eruptions combined. As a result, the balance is significantly disturbed and the so-called greenhouse gas effect leads to an increase in the global average temperature with the known consequences, such as extreme weather events, which occur much more frequently the higher the global temperature rises.

These extreme weather events occur because the atmosphere absorbs more moisture, which leads to exceptional regional precipitation and the jet stream responsible for the respective weather conditions slows down in its movement. This in turn leads to weather patterns remaining stable for longer, resulting in either months of rainy weather, as was the case this winter, or months of drought, as was the case in 2018/2019.

These correlations should be recognized by agriculture, then the further subsidization of fossil fuels, which cause this climate change and thus cause more frequent crop failures, would not be high on the list of priorities.

Last Thursday, the auction calendar for national emissions trading in Germany was published by the Leipzig-based EEX. The first auction will take place much later this year than last year, when the auctions started on 10/01/2023.

As before, the nEHS auctions will take place on Tuesdays and Thursdays.

The following dates are of special interest:

  • 05/03/2024 First auction in national emissions trading 2024 (nEZ23/nEZ24)
  • 19/09/2024 Last auction for 2023 nEZ
  • 05/12/2024 Last auction for 2024 nEZ in 2024

The first auction for EU emission allowances (EUAs) takes place today and it will be interesting to see what demand will look like after EUAs lost almost 14% in the last week alone and even briefly fell below the EUR 65 mark. This price level was last seen 15 months ago. However, if the current price level holds, a technical counter-reaction back above the EUR 70 mark would be likely; if not, then the EUR 60 mark would merely be a psychological resistance level.

    (Average Quotes Exchange / OTC)       
Instrument05/01/2412/01/24Change
EUA (December-2024-Future)76.35 EUR65.81 EUR-10.54 EUR
VER (Natural Carbon Offsets)1.18 USD1.81 USD+0.63 USD
VER (CORSIA eligible Carbon Offsets)0.54 USD0.74 USD+0.20 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)78.75 USD78.13 USD-0.62 USD
EURO (Currency, Forex)1.0943 USD1.0949 USD+0.0006 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. EUA, 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

Emissions Trading / Carbon Market News (08/01/2024)

Dear Madam or Sir,

In 2023, the German government generated a record amount of more than 18 billion euros from carbon emissions trading, which was five billion or 40% more than in the previous year.

A total of almost 8 billion euros was generated from the auctions in the European Emissions Trading system EU ETS and almost 11 billion euros in the national Emissions Trading System nEHS. This revenue is likely to continue to rise as the prices for national emissions certificates are now 50% more expensive than in 2023.

The fact that emissions trading has a strong steering effect is shown by the decline in the use of lignite in Germany, which in 2023 will have reached the level of 60 years ago, as published by the think tank Agora Energiewende This was mainly due to the expansion of renewable energies, which increased by 12% last year.

Compared to the previous year, carbon emissions therefore fell by 73 million tonnes to 673 million tonnes in 2023, the largest decrease ever. At 138 terawatt hours, wind energy was ahead of lignite for the first time last year, with 132 TWh.

However, there are also areas that clearly missed their targets, such as the transport sector once again. Here, a reduction of only 3 million to 145 million tonnes of CO2 was recorded, i.e. 12 million tonnes too much than planned.  This also applies to the building sector, which also showed a decrease of 3 million tonnes to 109 million tonnes of CO2, which is 8 million tonnes above the target.

Nevertheless, the installation of more than 1,000,000 solar systems last year and an increase of 14 gigawatts of energy generation also set a record. Commercial and private installations each accounted for half of this figure.

As Germany is the largest industrialised nation in the EU, these figures have put the price of CO2 emission allowances in the EU ETS under considerable pressure in the past trading week, which is why prices have fallen below the €80 mark again, down 5%.

However, the further we move towards the end of the submission deadline, a bullish development is likely, which is why it could be wise to use this weak phase to buy parts of your EUA portfolio.

This week, there are still no auctions on the EEX; they will only start again for EUAs in the following week. Prices could also be driven up by the fact that a prolonged cold front has arrived in Europe, which will increase demand for energy accordingly.

    (Average Quotes Exchange / OTC)       
Instrument29/12/2305/01/24Change
EUA (December-2024-Future)80.37 EUR76.35 EUR-4.02 EUR
VER (Natural Carbon Offsets)0.91 USD1.18 USD+0.27 USD
VER (CORSIA eligible Carbon Offsets)0.59 USD0.54 USD-0.05 USD
nEZ (German National Carbon Units)30.00 EUR45.00 EUR+15.00 EUR
ICE Brent Crude Oil (Benchmark Future)76.83 USD78.75 USD+1.92 USD
EURO (Currency, Forex)1.1036 USD1.0943 USD-0.0093 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. EUA, 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

Emissions Trading / Carbon Market News (02/01/2024)

Dear Madam or Sir,

In the last short trading week between the Christmas holidays and New Year, there was not too much news that had a fundamental impact on the price of EU emission allowances.

In contrast to the rest of the energy sector, however, European Allowances (EUA) rose slightly by just under two per cent at the end of the week and closed above the EUR 80 mark for the first time since the end of November.

As of today, the new price for national emission allowances in Germany applies, which has risen by a whopping 50 per cent from EUR 30.00 (nEZ23) to EUR 45.00 (nEZ24). For end consumers, of course, plus VAT.

This is still a long way to the prices of EU emission rights, but it will be noticeable for consumers, just like the end of the reduced VAT for the catering industry, which since yesterday is 19% again instead of the corona-related 7%.

Now that the construction industry has entered a crisis due to the rise in interest rates and inflation as well as the high cost of construction services and materials, restaurants are facing a tough challenge as well. Here too, in addition to the search for staff, the question now arises as to whether there will be sufficient demand if these costs are passed on.

The current survey of German liberal FDP members has shown that they are in favour of a continuation of the current government constellation by a narrow majority. An early election is unlikely to be expected from this side.

However, the German state elections in Saxony, Thuringia and Brandenburg, which will take place in September, already allow us to predict that the current governing parties will no longer play a significant role there and that the state parliaments there will move noticeably to the right – towards a party that denies anthropogenic climate change. The decision of the FDP members was therefore a very sensible one, as this could also be expected at federal level.

    (Average Quotes Exchange / OTC)       
Instrument22/12/2329/12/23Change
EUA (December-2023-Future)78.90 EUR80.37 EUR+1.47 EUR
VER (Natural Carbon Offsets)1.04 USD0.91 USD-0.13 USD
VER (CORSIA eligible Carbon Offsets)0.74 USD0.59 USD-0.15 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)78.94 USD76.83 USD-2.11 USD
EURO (Currency, Forex)1.1007 USD1.1036 USD+0.0029 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. EUA, 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

Emissions Trading / Carbon Market News (27/12/2023)

Dear Madam or Sir,

With a gross domestic product of almost 800 billion euros, North Rhine-Westphalia is not only the economically largest German federal state, but with more than 18 million inhabitants it is also by far the most populous, even though in terms of area it is only fourth after Bavaria, Lower Saxony and Baden-Wurttemberg.

The black-green state government under Prime Minister Hendrik Wust has now decided on requirements for renewable energies, which will come into force next year. From 2024, builders of non-residential buildings will be obliged to equip their properties with photovoltaic systems. From 2025 this will apply to all types of buildings. From 2026, the obligation for solar systems will also extend to the renovation of building roofs.

It is well known that the pricing of CO2 emissions in Germany will be significantly more expensive for tenants and owners in the coming year. Since these are net prices, VAT is of course added to the prices. Accordingly, one ton of CO2 currently costs consumers EUR 35.70, and from January 2024 it will cost EUR 53.55. In addition, the reduced VAT on natural gas and liquid gas is expected to rise again from 7% to 19% from February 29, 2024.

Regardless of VAT, the annual costs for a single-family home with a consumption of 20,000 KWh of natural gas will rise from EUR 130.00 to EUR 194.00 in the coming year due to the national emission allowances. For 2,000 liters of heating oil the costs rise from currently EUR 172.00 to EUR 258.00 and for 1,400 kg of liquid gas from EUR 172.00 to EUR 227.00. And there is no provision in the federal budget for the climate money announced before the election to be paid out to citizens.

After several bearish months, emissions allowances in the EU emissions trading system (EU ETS) rose significantly last week by 14% compared to the previous weekly closing price. In addition, the December 2023 contract has expired, which is why December 2024 is now the benchmark contract for the EUAs, on which the price development on the spot market is also based.

Last Thursday, the new 2024 auction calendar for the EU ETS was published by EEX. Accordingly, the first auction starts in the 3rd calendar week on January 15, 2024 with a total volume of 13,404,500 EUAs on all five trading days.

We are of course also at your disposal during this trading week.

    (Average Quotes Exchange / OTC)       
Instrument15/12/2322/12/23Change
EUA (December-2023-Future)69.22 EUR78.90 EUR+9.68 EUR
VER (Natural Carbon Offsets)0.37 USD1.04 USD+0.69 USD
VER (CORSIA eligible Carbon Offsets)0.58 USD0.74 USD+0.16 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)77.01 USD78.94 USD+1.93 USD
EURO (Currency, Forex)1.0892 USD1.1007 USD+0.0115 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. EUA, 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

Emissions Trading / Carbon Market News (18/12/2023)

Dear Madam or Sir,

Since last week it has been clear how the German federal government wants to solve its billion-euro problem, namely by increasing revenue and reducing expenditure.

Two things now also directly affect the area of decarbonization, namely national emissions trading and the premium for electric cars.

For some time now, companies have not received a bonus as a subsidy for the purchase of electric cars and now the bonus will no longer apply to private individuals if they have not submitted the application by yesterday, Sunday.

It is right that the bonus will be cancelled because electromobility will become established anyway, just when you consider the follow-up costs after the purchase. But they are also cheaper to purchase than their combustion counterparts. Just compare a current Model 3 Long Range, which has a practical range of more than 500 km, two engines, 440 hp, all-wheel drive and can accelerate from zero to 100 km/h in four seconds with an adequate combustion engine you can quickly reach six figures. You can get the Tesla for just under 52,000 euros gross.

It is also true that the price of carbon emissions in the transport and real estate sectors is being raised, but the communication from politicians is extremely poor. For Federal Minister of Economics Robert Habeck, an increase of 50.0% to 45 euros instead of 33.3% is just a “slightly higher carbon price”. And Federal Finance Minister Lindner forgets that the tax relief he is citing primarily affects those who can already afford a heat pump and an electric car.

And the announced climate money, which was intended to relieve the burden on low and normal earners and alleviate social hardship, will no longer be achieved in this legislative period, as Habeck had already announced months ago.

The last auction on EEX for 2023 is taking place today and the new trading calendars for the EU emissions trading system and the national emissions trading system have not yet been published.

Last week, the prices for EU emissions rights moved further south in the narrow downward trend channel and fell by a substantial 3% on a weekly closing price basis. It will remain interesting to see how the price behaves in the auction-free weeks and whether the next support in the area around 64.50 initiates a trend reversal.

    (Average Quotes Exchange / OTC)       
Instrument08/12/2315/12/23Change
EUA (December-2023-Future)68.63 EUR66.35 EUR-2.28 EUR
VER (Natural Carbon Offsets)1.09 USD0.37 USD-0.72 USD
VER (CORSIA eligible Carbon Offsets)0.70 USD0.58 USD-0.12 USD
nEZ (German National Carbon Units)30.00 EUR30.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)75.94 USD77.01 USD+1.07 USD
EURO (Currency, Forex)1.0768 USD1.0892 USD+0.0124 USD

(The VER quotes are average rates (carboncredits.com), which can be used within the framework of CORSIA and voluntary carbon offsetting. EUA, 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