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