CO2 Market – 05.01.2021

EU ETS begins 2021 with record highs

EU emissions trading system (ETS) allowances made a strong start to 2021, rallying to all-time highs in the first ans second week of the year, after taking direction from upward moves in the wider energy complex and on a backdrop of constricted permit supply.

The EU ETS December 2021 contract ended week 1 at €34.91/tCO2, the highest close for the front-year product since the EU ETS began. This was up by €2.19/t CO2 from where it ended 2020, marking the contract’s 10th consecutive week-on-week rise and its largest since the week beginning 24 August.

The prices went up in the second week till €35.65/tCO2 on 12.01.2021 and, then started to decrease. The EUA price on the ICE ECX exchange from London has been trading today, 18.01.2021, at €32/tCO2.

EU ETS emissions see big drop in 2019, latest EEA assessment shows

In 2019 the number of EU ETS emission allowances auctioned decreased by 36 % compared to 2018. However, total revenues from auctions increased by EUR 447 million because of higher carbon prices.

The EEA briefing ”The EU Emissions Trading System in 2020: trends and projections” found that the drop in emissions from facilities covered by the EU ETS was again driven by a strong shift in the fuels used for electricity generation, from coal towards less carbon-intensive energy sources such as gas and renewables. However, emissions from aviation, also covered by the ETS, continued to increase (1 %), reflecting the increasing demand for air travel in 2019.

The observed reduction in emissions between 2018 and 2019 was due to the increased price of CO2, which made coal less attractive, combined with the rising share of renewables in the total energy supply. Many countries also saw a switch from coal to natural gas.

Continued decreased in EU ETS emissions have been forecast for 2020 and 2021, but these projections do not take into account some of the most recently planned measures, and the impact of COVID-19 pandemic.

Source: ICE ECX, London & EEA, Paris

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CO2 Market – 05.01.2021

This morning 05.01.2021, the ICE ECX exchange in London opened with € 33,44 / tCO2. Yesterday, 04.01.2021, the EUA price reached the threshold of 34 € / tCO2, which the highest value reached up until now.

Causes of EUA increase

EUAs hit a new all-time high on Monday as cold weather prospects lifted the energy complex and allowance supply curbs continue to drive bullish sentiment.

Driving the latest uptrend rally is also the recent decision by the European Union to cut greenhouse-gas emissions by at least 55% of 1990 levels by 2030. Traders are also expecting regulations on the burning of fossil fuels will be tightened to meet the new target, including reducing the number of carbon credits available. The increased future ambition of emissions reductions will reduce supply and lower supply should lead to higher prices.

The prospect of high returns has drawn established commodities players into the carbon market. The Wall Street Journal remarks that banks like Morgan Stanley and trading houses such as Andurand Capital and Trafigura have all entered or expanded their positions in the carbon market in recent months.

Source: ICE ECX London & World Street Journal

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Happy Seasons!

We have reached the end of another year together and, as always, our best wishes are for you!

2020 has certainly put a strain on the world’s economy and on the temperament of the people that actively work for it, pushing our communities to find new solutions for work, for sustainable growth towards a better life.

However, even among the difficulties, the world has been able to move along keeping its feeling of hope alive. This has been possible thanks to the people, their faith, commitment and action.

We really wish you a peaceful Christmas and the best for the upcoming new year, hoping that very soon we will shake our hands again!

 

This is the reason

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The price of the EUA certificate

This morning 08.12.2020, the ICE ECX exchange in London opened with € 29,69 / tCO2. Last Friday, 04.12.2020, the EUA price reached the threshold of 30 € / tCO2. Unfortunately, following the announcement of the European Commission in 18.11.2020, by which the free allocation for 2021 will possibly delay a few months after compliance, we expect a difficult situation for EU ETS companies that have to buy EUA certificates. As a result, polluting companies can no longer get cash to buy the necessary compliance certificates for 2020 from the sale of future allocations. We recommend that you check the financial capabilities so that you can buy the CO2 certificates until 30.04.2021 at a price that is approaching the threshold of 30 € / tCO2 as we do not expect it to decrease.

Pollution in the EU

Fewer deaths linked to pollution

The new EEA analysis is based on the latest official air quality data from more than 4 000 monitoring stations across Europe in 2018.
EU, national and local policies and emission cuts in key sectors have improved air quality across Europe, the EEA report shows. Since 2000, emissions of key air pollutants, including nitrogen oxides (NOx), from transport have declined significantly, despite growing mobility demand and associated increase in the sector’s greenhouse gas emissions. Pollutant emissions from energy supply have also seen major reductions while progress in reducing emissions from buildings and agriculture has been slow.

Thanks to better air quality, around 60,000 fewer people died prematurely due to fine particulate matter pollution in 2018, compared with 2009. For nitrogen dioxide, the reduction is even greater as premature deaths have declined by about 54 % over the last decade. The continuing implementation of environmental and climate policies across Europe is a key factor behind the improvements.

“The EEA’s data prove that investing in better air quality is an investment for better health and productivity for all Europeans. Policies and actions that are consistent with Europe’s zero pollution ambition, lead to longer and healthier lives and more resilient societies,” said Hans Bruyninckx, EEA Executive Director.

The report also notes that long-term exposure to air pollutants causes cardiovascular and respiratory diseases, which both have been identified as risk factors for death in COVID-19 patients. However, the causality between air pollution and severity of the COVID-19 infections is not clear and further epidemiological research is needed.

 

Source: ICE ECX London & Energy in Demand

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High Tech Ceramics (HTC) – Technology made in Germany that reduces gas consumption and CO2 emissions with more than 10%

We would like to introduce you to the HTC technology produced and used in Germany for 10 years, tested by TÜV and GWI (Gaswärme Institut e.V. Essen) that can improve the fuel consumption of your production activities and, implicitly, reducing greenhouse gas emissions.

One of the ways to obtain hot water and heat is through boilers that use different types of energy. Thus, consumers want to save this energy, and this technology meets this need.

HTC technology saves energy in boilers for generating hot water and process steam through the heat accumulator at high temperatures.  Through the structure and construction of the ceramics, the hot gases are brought closer to the wall of the combustion chamber, improving the heat transfer. Recirculation of hot gases on incandescent ceramics leads to optimization of combustion and a reduction of emissions.

HTC ceramics store the energy of the flame and finally return it to the system through the radiation of fixed bodies. By the alternating action between the ceramics heat accumulator and the hot water of the boiler, this one cools more slowly  and reaches its operating temperature faster when starting (“Hot start”).

As a result, the burner must work less, the gas consumption being reduced by more than 10%, depending on the type of boiler, and reduces the greenhouse gas emissions, which are produced by combustion.

Poza HTC

For more information on this technology and how you can test the compatibility with your boilers system, you can contact us at info@carbonexpert.ro or 00 40 746 231 024.

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CO2 Market – 10.11.2020

The International Energy Agency (IEA) published in October 2020 its annual World Energy Outlook (WEO) where the IEA models different scenarios to the long-term developments of the global commodity and energy markets up to 2070.

Main key aways from the report:

* The pandemic has hit oil particularly hard, and total investment in energy dropped by 18%, but the share of renewables in the energy mix is up.
* Coal drops in all scenarios, to be replaced by nuclear and renewables.
* Amongst renewables, solar will experience the greatest growth in the next decade, and wind power will also experience steady growth.
* Primary energy demand in 2040 will still be covered largely by oil and gas.
* The states won’t achieve net-zero emissions until 2070, missing the 1.5oC target for 2050.

As an example, to reduce emissions by 40 per cent by 2030, almost 75 per cent of global electricity generation would have to come from low-emission sources by 2030 and more than 50 per cent of passenger cars sold worldwide would have to be electric in 2030 (compared to 2.5 per cent in 2019).

The ICE ECX exchange from London opened this morning (10.11.2020) its EUA trade sessions at 26,55 Euro/tCO2.

 

Source: IEA, Paris & ICE ECX London

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CO2 Market – 03.11.2020

POLL: Analysts elevate EUA price outlooks as market eyes new all-time highs

EU carbon prices will rise through the rest of this year, though they may not reach a new all-time high or sustainably hold above the tenuous €30 level until well into 2021, analysts predicted, as they substantially raised their EUA forecasts across the board.

The ICE ECX exchange from London opened this morning (03.11.2020) its EUA trade sessions at 24.15 Euro/tCO2, 2,03% more than the previous day.

Source: Carbon Pulse & ICE ECX London

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CO2 Market – 27.10.2010

” ELECTRIC UP ” financing program

We inform you that the Emergency Ordinance 159/2020 on financing small and medium enterprises and the HORECA field for the installation of photovoltaic panel systems for electricity production with an installed power between 27 kWp and 100 kWp required for own consumption and delivery of surplus in the System, has appeared. National power, as well as 22 kW recharging stations for plug-in hybrid electric and electric vehicles, through the ” ELECTRIC UP ” Financing Program.

Source: www.imm.gov.ro

Price of the EUA

This morning (October 27, 2020), the ICE ECX exchange in London trades at € 23.85 / EUA, 6.43% less than the previous day.
Mituve are the bearish pressure from big auctions, COVID safeguards, and Brexit uncertainty for the rest of this year, according to analysts, who expect bargain-hunting buyers will step in to cover price dips.

Source: ICE ECX  & Carbon Pulse, London

EU carbon prices to top €80 by 2030 if industrial innovation, wider climate action isn’t ramped up -report

EU carbon prices could soar to average €50 over the next decade and end Phase 4 of the ETS above €80 if abatement technology – particularly in the heavy industrials sector – doesn’t accelerate and governments and companies don’t ramp up their climate action.

That was one of the findings in a report published Tuesday by ABN Amro, with analysts at the Dutch bank warning of a steep rise in EUA prices based on slow progress in cutting emissions mixed with a more rapid reduction in allowance supply during the 2021-30 phase.

Source: Carbon Pulse, London

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The European CO2 Market – 20.10.2020

Get ready for the 2020 EU-ETS Compliance:
Borrowing allowances from Phase 4 not allowed

Phase 4 starts on January 1, 2021. As a compliance entity, are you wondering if you can use the free allocation of allowances that you will receive in Q1 2021 to fulfill the year 2020 compliance?

Read more and find out what you should get prepared for.

What is borrowing in the EU-ETS, and how does it work?

Borrowing in the EU-ETS means using allowances from future periods for compliance today. The allowances allocated in February are often used for surrendering in April that same year by some companies.

This is because the allocation of allowances takes place in February each year, but the surrender of allowances for the previous year takes place after this date, by the end of April. Therefore, EU-ETS compliance entities can use some of their new allocation to count towards the previous year’s compliance obligation.

However, the practice of borrowing is not allowed between 2 trading phases.

Emission allowances allocated in Phase 4 (from 1 January 2021 onwards) will not be accepted for the compliance of phase 3.

What should you expect for the year 2020 Compliance?

Phase 4 starts on January 1, 2021. The first free allocation of phase 4 allowances is scheduled for February 2021. However, it is important to underline that, in April 2021, the emissions of the last year of phase 3 (2013-2020) still have to be compensated. The compensation for 2020 emissions must be achieved by surrendering phase 3 allowances.

The registry will therefore not allow surrendering of phase 4 allowances to compensate for Compliance 2020. Participants of the EU-ETS system (operator and aircraft operators) must therefore ensure to have sufficient Phase 3 allowances for Compliance 2020 in their account(s).

Identify them: Phase 3 and Phase 4 allowances

Phase 4 allowances can be identified by a marking indicating that they are from Phase 4, at least until 1 May 2021.

Please note that all Phase 4 allowances, both the auctioned allowances and the allowances distributed through free allocation in year 2021 will be identified as indicated above. These cannot be used for Compliance of year 2020.

Use of CERs in Phase 4

CERs can no longer be used in phase 4 of the EU ETS. Up to 30 April 2021 at the latest, EU-ETS Compliance Entities can exchange CERs for Phase 3 emission allowances (EUA/EUAA).

From 1 May 2021 onwards, incoming transactions with CERs will no longer be allowed in EU accounts.

So, it is recommended to verify your remaining entitlement to exchange CER/ERU for phase 3 allowances as soon as possible since transactions with CERs/ERUS will not be any more accepted in the phase 4.

The ICE ECX exchange from London opened this morning (20.10.2020) its EUA trade sessions at 24.98 Euro/tCO2, 0.36% more than the previous day.

Source: Aither Group and ICE ECX, London

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The European CO2 Market – 07.10.2020

EU Parliament votes for 60% carbon emissions cut by 2030

The European Parliament voted on Tuesday (6 October) to update the EU’s climate target for 2030, backing a 60% reduction in greenhouse gas emissions by the end of the decade, up from 40% currently.

Lawmakers in the EU assembly voted the proposed amendment on the 2030 target by 352 votes to 326, with 18 abstentions, according to estimates.

The text will now be forwarded to the EU Council of Ministers representing the EU’s 27 member states for final approval. The EU’s objective is to wrap up negotiations by the end of the year.

The Parliament’s decision on the 2030 climate target took place on Tuesday evening as part of a wider vote on a proposed European Climate Law, which seeks to enshrine into hard legislation the EU’s goal of reaching climate neutrality by 2050.

Although initially the European Commission’s proposal was to increase the emission reduction target by 55% for 2030, it is among the few votes that do not take into account the Commission’s proposal.

We will continue to see a controversial end to the year in terms of the EU’s future climate commitments, which should be taken by  unanimous vote by all Member States. The European legislative process will certainly attract even greater volatility of the prices of CO2 certificates, which have been currently high volatile in the last weeks.

Next quarters in EUA – Eventful and Volatile

EUA price reached a 14-year high of €30,47/t on 14 September and twice exceeded €30/t during the third quarter, averaging at €27,41/t due to strong support from EU climate policies and bullish equities markets. The EUA market has persistently shrug off the weak fundamentals coming from the COVID-19 pandemic and plunging coal generation due to fuel switching, as market participants have kept their eyes on the Climate Law and 2030 emissions reduction target, but also on international politics, such as the elections in the US. The EUA certificate is currently traded today, 7 October 2020, at €27.43/t on the ICE ECX exchange from London.

Source: Euractiv, Brussels and Aither Group, Switzerland

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