The Carbon Market 28.11.2018

The ICE exchange from London closed yesterday, 27.11.2018, its trading operations on CO2 and energy, as follows:

• EUA Dec ’18 futures: € 19.65
• CER Dec ’18 futures: € 0.28
• Brent Crude Jan’19 futures: $ 60.75

Today’s price action provided further evidence that the market is beginning to slow down ahead of the end of the year and the expiry of the December contracts. EUAs closed down 0.9% at €19.65. In addition, the EU Council approval of the Brexit withdrawal agreement appears to have calmed some nerves, but the outcome of ratification in the UK parliament is by no means certain, and surprises may yet disturb the market.

In our opinion, there is no trend in place, other than very high volatility, and prices are likely to continue to fluctuate very widely for the next two to three weeks. EU carbon prices will rise by at least 60% to above €30 early next year as the onset of the MSR squeezes the market, analysts predict.

Regional and International Meetings

In the framework of the Three Seas Initiative – a European debate forum comprising 12 countries from Central and Eastern Europe, with the exit to the Baltic Sea, the Mediterranean Sea and the Black Sea, our CO2 international expert, Dr. Casiana Fometescu, was invited to represent Romania at the conference “COP24 and the Future of Climate Policy: What is the Role of the Three Seas Initiative”, organized in Poland, last week. On this occasion, Casiana Fometescu held in Warsaw on 22nd November 2018 a presentation titled “Romania’s Climate and Energy on the Path to the 2030  and 2050 EU Targets Achievment”. If you wish to receive the presentation, please contact us at info@carbonexpert.ro

At the same time, Casiana Fometescu will represent us at the UN Climate Change Conference and Summit, organized in Katowice/Poland, from 2nd to 14th December 2018.

The CO2 Market 17.10.2018

The ICE exchange from London has closed yesterday, 16.10.2018, its trading operations on CO2 and energy, as follows:

• EUA Dec ’18 futures: € 19.48
• CER Dec ’18 futures: € 0.29
• Brent Crude Dec’18 futures: $ 80.98
• German Power Q4 2019: € 51.050

The Global Warming Scientific Data

“The world must cut CO2 emissions 45% below 2010 levels by 2030 and achieve net zero emissions by mid-century if it is to stand a chance of limiting global warming to 1.5C”, the Intergovernmental Panel on Climate Change (IPCC) said on 10th October 2018, in a report highlighting the far-reaching differences in impact between 1.5C and 2C of warming.

The Special Report on Global Warming of 1.5°C will be a key scientific input into the Katowice Climate Change Conference in Poland in December, when governments review the Paris Agreement to tackle climate change. The EU emission reduction targets on medium term is in line with this trend (40% reduction by 2030 compared to 1990 levels), but it is likely to be revised.

The report highlights a number of climate change impacts that could be avoided by limiting global warming to 1.5°C compared to 2°C, or more. For instance, by 2100, global sea level rise would be 10 cm lower with global warming of 1.5°C compared with 2°C. The likelihood of an Arctic Ocean free of sea ice in summer would be once per century with global warming of 1.5°C, compared with at least once per decade with 2°C. Coral reefs would decline by 70-90 percent with global warming of 1.5°C, whereas virtually all (> 99 percent) would be lost with 2°C.

The report finds that limiting global warming to 1.5°C would require “rapid and far-reaching” transitions in land, energy, industry, buildings, transport, and cities. Global net human-caused emissions of carbon dioxide (CO2) would need to fall by about 45 percent from 2010 levels by 2030, reaching ‘net zero’ around 2050. This means that any remaining emissions would need to be balanced by removing CO2 from the air using advanced technology.

Source: IPCC Report, 10 October 2018

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

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!

Source: Thomson Reuters Point Carbon and Carbon Reporter, London

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.

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.

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.

Source: Carbon Tracker, April 2018

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).

Source: ICE ECX London

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.

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