Dear Sir or Madam,

Chaos days – it’s hard to find another summary term for the events of the past week.

Chaos days, for example, for the uncounted inhabitants of the Philippines and China, who had to be evacuated because of the typhoon “Mangkhut”, suffered heavy damage to their belongings and many of whom have already died. In the Philippines alone, 65 dead people have been reported so far, but many residents are still missing.

Chaos days, too, because at the time of the typhoon’s landfall, on the other side of the earth the storm “Florence” had also claimed its first lives and is incessantly flooding the southeastern US with unimaginable masses of water.

Chaos days but unfortunately also brought about by people, such as in the North Rhine-Westphalian Hambacher forest. The current eviction of the forest area, which has been occupied for some 6 years, proves to be a reflection of the political situation in Germany. Driven by the AFD, which is known to deny the man-made climate change, the policy is divided into the proponents of the fastest possible exit from the dirtiest energy source on the one hand and those who want to use lignite as long as possible. Here especially the energy giant RWE, who likes to advertise with the pun “voRWEggehen” (moving in front, to lead the way), but probably meant something else. Even though RWE may officially want to keep an eye on supply security, electricity costs and jobs in addition to climate protection in the energy transition, the current fight in the Hambacher Forest means everything else but “lead the way”. While, on the one hand, the share of renewable energies in Germany continues to rise and, on the other hand, coal burning is becoming more and more unattractive as a result of the significantly increased CO2 price, one has to consider the fight for the Hambacher Forest more as the behavior of a regime, which on the last day before the end of the war is still hastily carrying out legal executions of opponents of the regime. Anyway, it could be good that this shot goes backwards.

Chaos days, however, also on the carbon market. From the circle of intermediaries, someone on Friday called the situation as “insane”. From a technical point of view, the market has experienced the worst decline since 2006, with a fabulous 30 percent drop within one week. The background only can be explained with panic sales. On Wednesday, the market already saw a slightly weaker auction of Polish certificates on the EEX, followed by a really significantly worse result one day later. Speculative traders reacted in panic. On Monday of the same week, the price for pollution rights had risen to a high of 25.79 EUR and now probably none of the speculators wanted to miss the possible turnaround. This in turn automatically triggered this spectacular price drop through previously set stop-loss orders, which only came to a standstill at 17.90 EUR. In this dramatic phase, whose end was not foreseeable in the course of Friday, the spot market even partially discontinued trading. Intelligently, however, some traders stabilized with purchases the market again. Since then, the price has been moving in a range around the 20-euro mark.

 

(Average Quotes Exchange / OTC)
Instrument	2018-09-07	2018-09-14	Change
EUA (Spotmarket)	23.20 EUR	19.94 EUR	-3.26 EUR
EUA (December-2018-Future)	23.22 EUR	19.97 EUR	-3.25 EUR
CER (Spotmarket)	0.29 EUR	0.29 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	77.02 USD	78.08 USD	+1.06 USD
EURO (Currency, Forex)	1.1553 USD	1.1627 USD	+0.0074 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into 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 or +44.20.79790283.

 

With kind regards,

Advantag Services GmbH

 

 

 

Dear Sir or Madam,

Largely unnoticed by the rest of the German country, a clearly recognizable consequence of climate change in Germany is emerging in the Harz Mountains. Here are the dams of the six reservoirs, which are responsible for the regional drinking water supply, only at a level of only 45%. Since the beginning of the records in 1857, there has never been so little rainfall there as in the past few months. In addition, drinking water consumption has been particularly high due to the high summer temperatures.

If the drought persists, the water supply would last only a few months. The waterworks there have already taken initial measures to ensure the future supply. The people in the region are still not called to save water, but if no precipitation-rich fall and winter follow, the dams in February are mathematically empty in February 2019. A scenario that is known in Germany so far only from disaster films.

In the past week, CO2 emission certificates increased by more than 10% and closed above the mark of 23 euros per ton of CO2. In addition to the trend sequel, this may have been due to the announcement that Ministries of the Environment of France and Germany intend to devise common methods for the future pricing of greenhouse gas emissions over the next six months. An important point here is the extension of CO2 emissions trading to other industries and economic sectors that have so far been spared.

In July 2008, a European emission allowance (EUA) peaked at € 29.69 as all-time-high. 10 years later, the price seems to be aiming for this value again, because this morning the EUA were already well above the 25-euro mark. Demand for this week’s auctions and trade volumes are important indicators that need to be kept in mind.

 

(Average Quotes Exchange / OTC)
Instrument	2018-08-31	2018-09-07	Change
EUA (Spotmarket)	21.05 EUR	23.20 EUR	+2.15 EUR
EUA (December-2018-Future)	21.09 EUR	23.22 EUR	+2.13 EUR
CER (Spotmarket)	0.29 EUR	0.29 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	77.40 USD	77.02 USD	-0.38 USD
EURO (Currency, Forex)	1.1601 USD	1.1553 USD	-0.0048 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into 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 or +44.20.79790283.

 

With kind regards,

Advantag Services GmbH

Dear Sir or Madam,

In 2010, the German government launched the German “Energy and Climate Fund”, into which the proceeds of the auctions of German emission certificates on the Leipzig Energy Exchange EEX flow. This money is used, among other things, to finance electromobility, CO2 building renovation or to promote research into renewable energies.

This year, the fund can look forward to significant additional income. The German emissions trading office expects revenues to double to approximately two billion euros, which can be attributed to the significant increase in prices.

Prices for European emission rights rose again last week, reaching a new high of EUR 21.79 per ton of CO2 or its equivalent of other greenhouse gases on Thursday. Last time there was such a price level 10 years ago.

 

(Average Quotes Exchange / OTC)
Instrument	2018-08-24	2018-08-31	Change
EUA (Spotmarket)	20.70 EUR	21.05 EUR	+0.35 EUR
EUA (December-2018-Future)	20.75 EUR	21.09 EUR	+0.34 EUR
CER (Spotmarket)	0.29 EUR	0.29 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	75.74 USD	77.40 USD	+1.66 USD
EURO (Currency, Forex)	1.1620 USD	1.1601 USD	-0.0009 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into 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 or +44.20.79790283.

 

With kind regards,

Advantag Services GmbH

 

 

Dear Sir or Madam,

The Hausse is feeding the Hausse, say the exchange traders, and the European CO2 emission rights have now been running up since the end of last year. While the EUA closed exactly one year ago at EUR 6.09 per tonne of CO2, we have now, 12 months later, broken the 20 euro barrier and closed at EUR 20.70 on the spot market at the end of last week’s trading. This is an immense increase of 14.36% on a weekly basis or 239.90% on an annual basis.

The EUA price increases were accompanied by an impressive rise in oil prices, which were 5.59% higher on a weekly basis because US crude oil inventories had fallen by 5.8 million barrels due to lower net imports.

On Friday, however, it was clearly noticeable in the emissions trading market that market participants are increasingly hectic, even if only a slightly negative impulse is set. Shortly after 11:00 a.m., the EEX auction results of EUR 20.55 each for the 2,180,000 emission certificates became known, which was a few cents below the current stock exchange price with a lower number of bidders. As a result, some market participants closed long positions, which led to a brief but noticeable drop in prices from around EUR 20.60 per EUA to less than EUR 20.

This week, a total auction volume of just 8,088,500 EUA will be offered on the EEX, as no auction is taking place today due to the British bank Summer Holiday.

The summer break will end next week and the regular auction volume will be available again. Even if no auction is held for an EEX event on Thursday after next, a total of 18,528,000 allowances will be auctioned off on EEX and ICE. In the following 37th calendar week the auction volume will then rise to 21,501,000 EUA.

It therefore remains to be seen whether the price rises will continue at the higher auction volume or whether the market will enter a consolidation phase.

 

(Average Quotes Exchange / OTC)
Instrument	2018-08-17	2018-08-24	Change
EUA (Spotmarket)	18.10 EUR	20.70 EUR	+2.60 EUR
EUA (December-2018-Future)	18.14 EUR	20.75 EUR	+2.61 EUR
CER (Spotmarket)	0.27 EUR	0.29 EUR	+0.02 EUR
ICE Brent Crude Oil (Benchmark Future)	71.73 USD	75.74 USD	+4.01 USD
EURO (Currency, Forex)	1.1437 USD	1.1620 USD	+0.0186 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into 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 or +44.20.79790283.

 

With kind regards,

Advantag Services GmbH

Dear Sir or Madam,

The German Federal Minister of Economics, Peter Altmaier, is currently on his way to push ahead with the expansion of the power lines that are to bring northern German wind energy to southern Germany. This is a sensible undertaking, because last year 38% of the energy produced in Germany came from renewable sources, but only about 12% of this was used because the lines to the south do not yet exist. This alone cost Tennet, the largest network operator in northern Germany, just under a billion euros in 2017, as the excess grid capacities had to be sold at a negative electricity price, which is ultimately passed on to the consumer.

According to plans, sufficient line capacities will not be available until 2025 to transport the wind power generated from the north to the south of Germany. Until then, several billion euros will probably still be spent on foreign countries purchasing our surplus quantities of electricity.

And once again this year the share of renewable energies has risen sharply. In the first half of 2018, 117 billion kilowatt hours were generated, another 10% more than in 2017. The German government’s goal of achieving at least 65% of energy generation through renewables by 2030 thus seems achievable.

In 2011, the nuclear catastrophe occurred in Fukushima, Japan. After German Chancellor Angela Merkel hastily and unexpectedly decided that German nuclear power plants would be taken off the grid in a few years, the prices for European emission certificates rose significantly and reached a temporary high of EUR 18.18 in June 2011. On Tuesday, the EUA stopped precisely this resistance, but exceeded it the next day to record a new 10-year high of EUR 18.28 per EUA. If the bullish price trend continues in September with a normal auction volume, a rise above the 20-euro mark would not come as a surprise.

On the other hand, the global economic risks that can have a significant impact on the European economy should not be ignored on the fundamental side either.

A sensible side effect of the current price increase is that electricity producers are increasingly switching from coal-fired power generation to gas, as gas electricity only generates half as much CO2 as coal-fired electricity.

 

(Average Quotes Exchange / OTC)
Instrument	2018-08-10	2018-08-17	Change
EUA (Spotmarket)	17.87 EUR	17.87 EUR	+0.23 EUR
EUA (December-2018-Future)	17.89 EUR	17.89 EUR	+0.25 EUR
CER (Spotmarket)	0.27 EUR	0.27 EUR	+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)	72.90 USD	72.90 USD	-1.17 USD
EURO (Currency, Forex)	1.1409 USD	1.1409 USD	+0.0028 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. CER CP1 and ERU are eligible in ETS until end of March 2015 and must be swapped into 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 or +44.20.79790283.

 

With kind regards,

Advantag Services GmbH