The CO2 Market 26.09.2018

The ICE exchange from London has closed yesterday, 25.09.2018, its trading operations on CO2 and energy, as follows:

  • EUA Dec ’18 futures: € 21.29
  • CER Dec ’18 futures: € 0.29
  • Brent Crude Dec’18 futures: $ 81.19
  • German Power Q4 2019: € 54.50

Strategy for long-term on EU greenhouse gas emissions reductions

The European Commission has launched a stakeholder consultation on the strategy for long-term greenhouse gas emissions reductions.

The consultation is open until October 9 and the Commission plans to release the final version of its long-term strategy ahead of COP24, taking place at the beginning of December in Poland. The strategy, likely released in the form of a Communication, will indicate an aspirational target, but will stop short of setting binding targets.

The first question presents three options for EU’s 2050 target, in light of the Paris Agreement commitment:

  • Reduce GHG emissions by 80% by 2050 compared to 1990 levels
  • Reduce GHG emissions in the range of 80 to 95% by 2050 compared to 1990 levels
  • Achieve a balance between emissions and removals in the EU by 2050.

In case you are interested to contribute, you can access it here.

On the same topic, OECD released a report on Tuesday, 18.09.2018 concluding that governments need to raise carbon prices much faster if they are to meet their commitments on cutting emissions and slowing the pace of climate change under the Paris Agreement.

Source: European Commission, Bruxelles and Thompson Reuters Point Carbon, London

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The CO2 Market 23.08.2018

The ICE exchange from London has closed today, 23.08.2018, its trading operations on CO2 and energy, as follows:

  • EUA Dec ’18 futures: € 20.41
  • CER Dec ’18 futures: € 0.30
  • Brent Crude Dec’18 futures: $ 74.66
  • German Power Q1 2019: € 55.20

EU carbon prices surged by almost a euro with 3.1% within the day to extend their 10-year high for a second successive session on Thursday, 23.08.2018, as power prices climbed and analysts revised their near-term and medium forecasts upwards after underestimating the year’s stellar gains.

EU carbon allowances are expected to continue to climb for the rest of the year as speculators keep buying in anticipation of further increases and utilities lend support, analysts said, following several weeks of strong price increases that have already pushed prices to their highest for a decade.

EU carbon prices could average €35-40 over 2019-2023, accelerating coal-to-gas power switching and potentially questioning the rationale for keeping old coal and lignite power plants running beyond 2021, analysts said on Tuesday, according to Thomson Reuters Point Carbon. They have adjusted their average price forecast for 2018 to €20, and say the price could reach €25 before the end of the year.

For your daily trading operations or any speculative tradings, we are here to help you!

Screen Shot 2018-08-23 at 18.34.15

Source: Thomson Reuters Point Carbon and Carbon Reporter, London

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Innovate4Climate 2018

Casiana Fometescu, international consultant on CO2 issues from Carbon Expert has attended Innovate4Climate conference, which took place last week in Frankfurt, on 22-24 May 2018 in Kap Europa Congress Centre.

This year, Innovate4Climate has been the place where finance, business, technology, and policy leaders met to drive climate investment in future carbon low technology.

Climate action at unprecedented speed and scale is essential for making the investments required to avoid the effects of a 2 degree warmer world and meet the Paris climate commitments. In a world of constrained public resources, traditional forms of concessional finance will not be sufficient to fund the investment required for a transition to a low-carbon future. Scaling up and accelerating access to finance – from multiple sources, as efficiently and effectively as possible – to redirect the trillions of dollars sitting in unproductive, low yielding as well as unsustainable investments towards longer-term, climate-smart investments will be key.

Innovate4Climate 2018 has convened global leaders from industry, government and multi-lateral agencies for a one-day high level Summit, and two days workshops and a Marketplace, to work and dialogue on development of innovative financing instruments and approaches to support low-carbon, climate-resilient development pathways; mobilization of private investments in climate action; support to developing countries in their NDCs implementation; development of ideas on how market-based and non-market based climate finance instruments identified in the Paris Agreement can best be designed to maximize impact and minimize costs.

For more information on how to calculate and reduce the company’s carbon footprint and get funding for your investment plan in technologies that increase the company’s energy efficiency, please contact us. Also, if your project already involves a significant reduction in CO2 emissions in the atmosphere, we can help you get carbon credits for these CO2 emission reductions.


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The Carbon Market 24.05.2018

CO2 emissions covered under the EU ETS rose by 0.3% in 2017, according to EU ETS verified data for 2017 published by the European Commission on 19th May 2018, confirming the small increase both reported in preliminary data released in April and predicted by analysts.

An increase had been widely forecast due mainly to increased coal generation as nuclear plants suffered reliability problems and hydro generation was very low in many parts of Europe. Yet, carbon price has risen almost double since the start of 2018 while oil, power, and natural gas are all 20% higher than they were at the beginning of 2018.

While the EU compliance was reaching its climax, the speculative trades continued to support the European carbon market, betting on higher prices in the coming months. April’s open interest in call options for December 2018 EUAs has risen to 207 million tones CO2, while put options show a total of 139 million tones CO2.

Analysts in mid-April raised their price forecasts for 2018 by around 30%, especially because of this speculative element of the CO2 market, which continues in May, as well.

Yesterday, 23.05.2018, EUA closed up at Eur 16.01, the highest level since 2011, after a long steady recovery. This consolidation may give traders encouragement to add length, and given the scale of recent price moves, this may bring more rise of the price into play.

At the same time, on 15th May 2018, the European Commission published the Total Number of Allowances in Circulation into the EU ETS (TNAC), which amounts to 1,654,574,598 allowances.

This means that between 1 January 2019 and 31 August 2019 264,731,936 allowances will be withheld from EU ETS auctions and placed in the Market Stability Reserve (MSR). This represents 16% of the TNAC over this 8 month period.

When the MSR starts operating in 2019, it will absorb each year 24% of the allowances in circulation if this figure is above 833 million allowances. From 2024 onwards the intake rate declines to 12%. The first review of the functioning of the MSR is scheduled to take place in 2021.

The Market Stability Reserve is another reason for the CO2 price increase together with the speculative trend.

Given these moves and forecasts, forward transactions we highly recommend Romanian installations to secure the price for the expected CO2 trades. This means that the price is locked up at the current level while payment is done at an agreed future time, possibly closed to the next surrender.

The Italian company, Aither CO2 has entered for the first time, this year, into Romanian carbon market, helped by the Romanian consultancy Carbon Expert. They won both tenders at BRM exchange as well as state and private company tenders, with revenue on the Romanian CO2 market of more than 12 milion Euro.

We are looking forward to seeing your interest in forward transactions due to the current risen trend of the EUA price.

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The Carbon Market 02.05.2018

The ICE exchange from London trades today as follows:

EUA spot: € 13.14
EUA Dec ’18 futures: € 13.16
CER Dec’18 futures: € 0.20

Brent Crude futures Dec’18: $ 70.59

German energy Aug’18: € 43.72

According to Carbon Tracker report below, the price of the EUA certificate continues to rise as a result of the implementation of the European legislation regarding the Market Stability Reserve: 20 Euro/tCO2 in 2019 and 25-30 Euro/tCO2 in 2020-2021.

Screen Shot 2018-05-02 at 12.09.32

Source: Carbon Tracker, April 2018

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The Carbon Market 10.04.2018

The ICE exchange from London trades today as follows:

EUA spot: € 13.43
EUA Dec ’18 futures: € 13.38
CER Dec’18 futures: € 0.20

Brent Crude futures Sept’18: $ 70.09

German energy spot: € 36.06

The price of the EUA certificate continues to rise as a result of the increasing demand for certificates required for compliance in 2017. At this time, the EUA certificate is traded at 13.43 Euro / EUA. The upward trend in this year’s EUA price can be seen in the chart below.

Carbon Expert awaits your trading requests to meet compliance targets, as well as other transactions that will streamline CO2 reduction activities (loan, CO2 portfolio management).

Screen Shot 2018-04-10 at 15.31.28

Source: ICE ECX London

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The Carbon Market 07.03.2018

In February, Carbon Expert through Casiana Fometescu represented the Italian company AitherCO2 in the tender organized by Electrocentrale Bucharest (ELCEN) for “The acquisition of 1,300,000 greenhouse gas emissions certificates for compliance”, and AitherCO2 was declared the winner of the auction.

Carbon Expert and AitherCO2 inform you about the most important issues and recent European standards that you need to consider in order to plan the CO2 exposure in the next period and invite you to submit us your trading requests.

EU-ETS Reform 2021-2030

Last week, the EU nations finally signed off on the comprehensive post-2020 EU ETS reform package.  The most important changes that will affect the EU-ETS directly are the followings:

  •  The cap will decrease of 2.2% rate per year, compared to the current level of 1.74% in linear reduction factor, which means less free allocation for installations;
  • The Market Stability Reserve (MSR) will double to 24% of permits in circulation over a 5 year period; starting from 2023 the allowances held in the reserve above the total number of allowances auctioned during the previous year would be cancelled; this means few carbon certificates on the market, and consequently increase in the EUA price;
  • Any excess allowances held in the registry from this phase 3 (2013-2020) will be eligible to be used in the next one. But nowhere it is stated that EUAs from phase 4 free allocation will be eligible for the 2020 compliance (the last compliance from phase 3). This means that it is possible that companies need to buy more EUAs as initially planned for compliance 2020;
  • Starting from 2020, CERs will not be eligible for compliance purposes under EUETS.

The use of CERs/ERUs

It is important to take into consideration the possibility to use of CERs/ERUs for compliance in the current phase 3:

  • The use of CERs/ERUs in phase 3, for companies that were in the EU-ETS before 2013, is possible for an amount of CERs equal to the 11% of the whole amount of Verified Emission from 2008-2012;
  • For companies that enter the EU-ETS starting from 2013, an yearly amount of CERs/ERUs equal to the 4,5% of the verified emission of that year can be converted into EUAs.

On Monday, EUAs climbed to a fresh six-year high as bullish sentiment grew after one of the strongest auctions of the year and as EU ministers gathered to discuss carbon price floor options. Ministers from six EU nations met in Brussels on Monday, 05.03.2018 to discuss further initiatives, aimed at bolstering European carbon prices, but stopped short of launching a coalition to form an EU price floor.

All this updates are driving a positive trend in market prices for the EUA benchmark contract that is now trading above 10,43 Euro/EUA.

For any further questions related to your greenhouse gase emissions needs, please don’t hesitate to contact us.

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The CO2 Market – 23.01.2018

International CO2 market – 2018 estimated achievements

  • The final, largely procedural votes on the EU ETS revisions will be taken in the European Parliament and the Council, and we will turn attention to the implementing regulations.
  • Analysts polled by Carbon Pulse have raised their near-term forecasts for EU carbon by as much as 10%, with most predicting that front-year EUAs would finish this year near or above €10 but keeping a cautious tone for prices in early 2018.
  • Canada will advance its pan-Canadian approach to carbon pricing, after the government released its long-awaited draft federal backstop legislation and its output-based pricing system regulatory framework earlier this month.
  • California’s regulators will begin the formal process to amend the state’s post-2020 cap-and-trade regulation and finalize it late this year, while neighbors in Oregon and Washington consider carbon pricing legislation.
  • RGGI states (Regional Greenhouse Gas Initiative – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont) from the U.S. will vote on legislation / regulations to implement reforms agreed last year, and Virginia and New Jersey will decide whether and when to join RGGI.
  • China will add more operational details to its ETS, enabling the market to begin to function.
  • South Korea will consider strengthening its ETS to better assure results for its NDC.
  • ICAO (International Civil Aviation Organization) will adopt final Standards and Recommended Practices (SARPs) that will govern national implementation of CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation).
  • The UNFCCC will agree on the Paris Rulebook, including rules for Article 6.

Source: IETA, Geneva and Carbon Pulse, London


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UNFCCC COP23 Bonn Results

Casiana Fometescu from Carbon Expert participated to the annual United Nations Framework Convention on Climpate Change COP23, which was held between 6 – 17 November in Bonn, and gathered over 28,000 participants from all over the world, from high state officials to NGOs and businesses. Casiana COP23 2017 Bonn

This year’s UNFCCC climate summit in Bonn was never going to be a high-profile world event like Paris in 2015. Climate diplomats came away from the French capital two years ago with a mandate to negotiate the rules that will underpin the Paris Agreement from 2020, and that process continues until next year.

However, this was the first Conference of the Parties to the UN Framework Convention on Climate Change since Donald Trump came to power in the United States, and the climate community was anxiously awaiting to see how the US would treat the remaining four years of its membership of the Paris treaty.

There were many key technical issues that needed to be progressed, ranging from finance to transparency to international carbon markets. The goal is to complete work on the “Paris rulebook” in time for next year’s COP24 in Katowice, Poland.

Outside of the technical negotiations, the main attraction was the United States. The team of career diplomats from the State Department arrived without fanfare and promised to engage with their colleagues in crafting rules for Paris despite the fact that as things stand, the US will not be a party by the time the new regime takes effect.

On the sidelines of the talks, a group of high-profile American politicians and businessmen, including California governor Jerry Brown and media mogul Michael Bloomberg, headed an alternative US delegation, which highlighted that the lack of federal climate policy is dwarfed by the amount of action taking place at a sub-national level.

One of the main headlines: the UK and Canada announced an alliance of 20 nations that are committed to phasing out coal as a power fuel. The group said it hopes to have 50 member states by next year’s meeting.

And while coal has already been under attack for some time, Norway took things a step further. The country’s central bank said it will recommend to the government that the Norwegian sovereign wealth fund – the world’s biggest – should divest from oil and gas companies.

But half-way through the two-week conference, scientists from the Global Carbon Project cast a pall over the meeting when they reported that emissions would likely rise in 2017, after three years of little change.

Within the negotiations themselves, the main goals included establishing a system for countries to be able to share and analyze their progress towards decarbonization. This transparency mechanism would also apply to the financial contributions that developed countries have committed to making to the most vulnerable nations.

In Bonn, rich countries managed to resist efforts calling for a fuller account of their contributions while in turn, developing countries blocked calls for them to provide greater detail on their emissions reductions. Talks on transparency will resume next year.

There were also proposals that wealthy nations should do more in the run-up to the start of the Paris Agreement in 2020. Part of this involves greater adherence to goals set up under the Doha Amendment, which extends the Kyoto Protocol to 2020. Countries agreed to set up special sessions next year to review interim progress on reductions and on climate finance.

The controversial proposal for compensation for climate effects – known as “loss and damage” – also reappeared, but met with continued resistance from the richer nations. However, the meeting did agree to further talks.

All in all, Bonn represented a step forward on the path to a Paris rulebook, most observers agreed. However, there is much to do. On carbon markets, for example, there was very little obvious advance: negotiators exchanged ideas on potential rules, but the proposals for a final text quickly grew out of control and must be slimmed down dramatically by next December.

Source: Carbon Expert and Allcot Group

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The Carbon Market – 05.10.2017

The ICE exchange from London trades today, 05.10.2017, CO2 certificates and Brent Crude as follows:

  • EUA spot:  € 6.91
  • EUA Dec ’17 futures: € 6.92
  • CER daily futures: € 0.20
  • Brent Crude futures Dec’17: $ 56.21

The European CO2 Market EU ETS

The third quarter 2017 European Emission Allowances EUA closed with an increase of more than 40% against the previous quarter. Also from point of view of the first nine months, the pollution rights rose around 8%.

A important reason therefor could be the upcoming negotiations of the European Member states, which will review their position on the EU-ETS reform plans on Friday this week. Than they will discuss the proposal of cancellation of emission rights from the market stability reserve starting in 2023.

The previous proposal did not mention a cancellation, what could lead to the fact, that they could return into the market, if there was a surplus of less than 433 million units. The European Parliament also supports the cancellation of 800 million units after January 1st, 2021.

EU carbon prices are set to more than double to €15-20 by 2019-20 as utilities up their hedging, curbing supply just as the MSR starts sucking up hundreds of millions of allowances, a Barclays analyst said.

Source: Barclays, London

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