Emissions Trading / Carbon Market News (01/07/2024)

Dear Sir or Madam,

Every week, several million EU emission allowances are auctioned on the Leipzig EEX, but what are these revenues used for?

Last Friday, the EU paid out a total of almost 3 billion of these via the modernisation fund to support 39 energy projects. These are intended for the reduction of greenhouse gas emissions in the agriculture, industry, transport and energy sectors, such as the expansion of renewable energies.

The modernisation fund particularly supports EU member states with a lower gross national product that are currently still heavily dependent on coal and helps them to carry out investments in line with the REPowerEU plan and the “Fit for 55” package.

However, revenues from the auctioning of carbon emission allowances will be lower if prices fall, which is naturally the case when demand is lower.

Last week, prices remained under pressure and moved in a range of €65.78 to €69.09, visibly below the 200-day line, which currently stands at just over €70.

In addition to the suboptimal economic development, particularly in Germany, the lower demand is also due to the expansion of renewable energies, which, according to analysts at London-based Energy Aspects, has already led to a year-on-year decline of 43 million tonnes of CO2 in the first half of the year. They expect a further decrease of 14 million tonnes in the third quarter of 2024.

However, as the deadline for submitting emission allowances for the previous year was changed from the end of April to the end of September for the first time this year, demand could pick up again in the coming months, which should also be helped by the halving of the auction volume in August. 

Insofar as the price of EUAs continues to move in the downward trend channel that began at the start of last month, prices below the EUR 65 mark would also be possible and this would appear to be a good opportunity for buyers to stock up on at least some of their open demand.

    (Average Quotes Exchange / OTC)       
Instrument21/06/2428/06/24Change
EUA (December-2024-Future)68.13 EUR67.47 EUR-0.66 EUR
VER (Natural Carbon Offsets)0.99 USD1.01 USD+0.02 USD
VER (CORSIA eligible Carbon Offsets)0.38 USD0.43 USD+0.05 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)85.18 USD85.69 USD+0.51 USD
EURO (Currency., Forex)1.0691 USD1.0707 USD+0.0016 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 (27/05/2024)

Ladies and Gentlemen,

Carbon pricing instruments currently cover around a quarter of global greenhouse gas emissions. There are currently 75 carbon taxes and emissions trading systems worldwide, and the trend is rising.

According to a report by the World Bank, revenue from carbon pricing reached record levels last year, exceeding the USD 100 billion mark for the first time. More than half of the funds flowed directly into climate and nature conservation programmes.

In our view, the introduction of the European Union’s Carbon Border Adjustment Mechanism (CBAM) will also lead to the introduction of carbon trading systems in other countries, which will have a stronger local steering effect so that the funds generated in this way can be used in the respective country and not channelled into the revenues of the EU Emissions Trading Scheme.

In the last trading week, the price of carbon emission allowances in EU Emissions Trading System rose by almost five euros or nearly seven per cent. The price has left important resistance at just under EUR 74 behind and has established itself above the 200-day-line, which is currently at EUR 72.40. If nothing fundamentally bearish happens and there is no major profit-taking, there is much to suggest that the price will remain above the 200-day line this week and not leave the upward trend channel. This could even lead to a test of the EUR 80 mark in the benchmark December 24 contract.

There will be no auction on the Leipzig EEX today (Monday) due to the Spring Bank Holiday and the Polish auction will also not take place on Wednesday as scheduled. As a result, only a total of 7,995,000 EUAs will be auctioned this week, which corresponds to just around 60% of the previous week’s auction volume.

    (Average Quotes Exchange / OTC)       
Instrument17/05/2424/05/24Change
EUA (December-2024-Future)70.69 EUR75.61 EUR+4.92 EUR
VER (Natural Carbon Offsets)1.09 USD1.02 USD-0.07 USD
VER (CORSIA eligible Carbon Offsets)0.42 USD0.40 USD-0.02 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)84.30 USD82.33 USD-1.97 USD
EURO (Currency, Forex)1.0868 USD1.0847 USD-0.0021 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 (13/05/2024)

Ladies and Gentlemen,

Peter Wiese is the environmental policy spokesman for the largest political group in the European Parliament, the Christian Democratic EPP, where he is responsible for emissions trading and climate protection.

In view of the current 30% drop in the price of EU emission allowances compared to last year’s highs, Mr Wiese explained last week that the EPP does not believe it would be desirable for prices to quickly rise back into the three-digit range due to weakening European industrial production.

According to Wiese, the decarbonisation of industry will not work quickly enough and a deindustrialisation of Europe would lead to Europeans losing their prosperity and Europe not being a role model for the rest of the world. For this reason, Liese and his parliamentary group have insisted that the main effects of the tightening of European climate targets in emissions trading should not materialise until 2027, such as a reduction in the issue of free certificates but front-loading of emission allowances.

However, he also believes that the politically desired slump in the rise in European carbon prices is only temporary and emphasised that no one should be under any illusions: “Those who invest in clean technologies now will benefit in the long term. Those who believe they can simply carry on as before in the coming decades will be penalised”.

Last week, the price of the EUA-benchmark-contract December 2024 broke through the 200-day line several times, but closed below this strong resistance at the end of each trading day.

The 200-day-line currently stands at EUR 73.22 and last week’s closing price is just over one euro away from it. It will be interesting to see whether the price remains within the current upward trend channel this week and thus possibly breaks through the 200-day line or whether it heads in the direction of the 38-day line, which is currently at 67.79 euros.

Following last week’s holiday-related lower auction volume of 8.5 million EUAs, 12,000,500 emission allowances will be auctioned on the EEX this week, of which 906,000 EUAs are for the aviation industry, although these can now also be used for stationary installations.

    (Average Quotes Exchange / OTC)       
Instrument03/05/2410/05/24Change
EUA (December-2024-Future)72.01 EUR71.91 EUR-0.10 EUR
VER (Natural Carbon Offsets)0.96 USD1.01 USD+0.05 USD
VER (CORSIA eligible Carbon Offsets)0.38 USD0.44 USD+0.06 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)82.67 USD82.62 USD-0.05 USD
EURO (Currency, Forex)1.0757 USD1.0765 USD+0.0008 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 (06/05/2024)

Ladies and Gentlemen,

At the beginning of last week, the leading Western industrialized nations (G7) agreed in Turin (Italy) to phase out coal by 2035. Italy holds the G7 presidency this year.

This is three years earlier than Germany had legally stipulated. In North Rhine-Westphalia, the coal phase-out has already been set for 2030, but in the east of the republic, Saxony-Anhalt, Saxony and Brandenburg, there were already reservations about a phase-out before 2038. Now that 2035 has been set, the structural change in these German federal states must be driven forward more quickly.

As suspected last week, the price of emission rights moved between the 38- and 200-day lines in the past trading week, even though a brief upward breakout from this price range was attempted on Friday.

On a weekly closing price basis, there was an increase of more than two euros and a closing price for the December benchmark contract of just above the 72 euro mark.

As this Thursday is Ascension Day, the auctions on Thursday and Friday have been cancelled. As a result, only 8,509,000 EUAs will be auctioned on the EEX energy exchange in Leipzig.

    (Average Quotes Exchange / OTC)       
Instrument26/04/2403/05/24Change
EUA (December-2024-Future)69.92 EUR72.01 EUR+2.09 EUR
VER (Natural Carbon Offsets)1.40 USD0.96 USD-0.44 USD
VER (CORSIA eligible Carbon Offsets)0.59 USD0.38 USD-0.21 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)88.06 USD82.67 USD-5.39 USD
EURO (Currency, Forex)1.0690 USD1.0757 USD+0.0067 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 (05/02/2024)

Dear Madam or Sir,

Last week, the European Commission initiated infringement proceedings against Germany and 25 other countries for failing to implement a directive on EU emissions trading (EU ETS).

This directive concerned, among other things, the creation of a social climate fund, the new EU emissions trading system for transport and buildings, which is due to start in 2027, and the extension of emissions trading to shipping.

The European Commission has also drawn up a draft climate target for 2040, which, according to the German Press Agency, envisages a 90% reduction in greenhouse gas emissions compared to 1990 and is to be presented this week.

The most important component here is the “Fit for 55” legislative package, which includes extensive measures for industry, the energy sector, the transport sector and agriculture. 

According to the draft, a reduction of 90 – 95% by 2040 is required in line with the recommendations of the Scientific Advisory Board in order to prevent key tipping points in the climate system and “potentially catastrophic impacts on human society and ecosystems” from being exceeded.

As the EU’s central market-based instrument is CO2 emissions trading, the draft is also likely to have an impact on the future design of emissions trading, such as the inclusion of additional sectors and the increase in the annual reduction factor of the emission allowances to be auctioned.

Last week, prices in EU emissions trading fluctuated within a relatively moderate range between EUR 61.23 and EUR 65.16 in the EUA December 2024 benchmark contract.

As the Polish auction will not take place on Wednesday, a total of 11,094,500 EUAs will be auctioned on the other trading days.

    (Average Quotes Exchange / OTC)       
Instrument26/01/2402/02/24Change
EUA (December-2024-Future)63.58 EUR63.40 EUR-0.18 EUR
VER (Natural Carbon Offsets)1.33 USD1.59 USD+0.26 USD
VER (CORSIA eligible Carbon Offsets)0.77 USD0.88 USD+0.11 USD
nEZ (German National Carbon Units)45.00 EUR45.00 EUR+0.00 EUR
ICE Brent Crude Oil (Benchmark Future)83.15 USD77.40 USD-5.75 USD
EURO (Currency, Forex)1.0848 USD1.0788 USD-0.0060 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