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.

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

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.

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.

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

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

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

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

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

The EU ETS Market – 15.09.2020

EU-ETS Policy Update: a busy policy autumn ahead

EUA will again take direction from policy in the coming weeks and months, and we expect more volatility on Brussels-related news and announcements.

The autumn kicked off with signals the European Commission could be proposing a 2030 climate ambition target in the higher end of the 50-55% reduction announced in Green Deal. Last Friday, 11.09, the European Parliament’s environment committee has voted for a new EU-wide target to reduce carbon emissions 60% by 2030, setting the stage for tough negotiations with EU countries and the European Commission, which is expected to propose a 55% goal this week.

With regards to other policy-related drivers; while the UK’s exit from the EU-ETS is settled, the impact of a potential no-deal Brexit on the economy could spill over to EUA.

The ICE ECX exchange from London closed yesterday at 30,47 euro EUA futures with more than 7% more than Friday, 11.09.

Source: EC, Brussels and ICE ECX, London

Romanian industry under pressure amid delayed indirect EU ETS cost payments

Published by Carbon Pulse, London on August 26, 2020

Many of Romania’s heavy industries risk insolvency as the government has not yet compensated facilities for their indirect ETS costs, despite getting EU state aid approval to do so in May.

Aluminium producer ALRO declared on 23.08 that its Slatina facility faced insolvency and would run out of funding to pay staff within months unless the government paid compensation for costs associated with increased electricity prices as a result of the bloc’s carbon market. Just three weeks earlier, ALRO had declared a first-half net profit of RON 254 million (€52 mln), with calculations assuming indirect cost compensation, a measure set out in the ETS Directive to prevent carbon leakage.
The company, likely attempting to pressure the government to speed up the payments, said it could eventually be forced to declare bankruptcy and leave around 20,000 people unemployed.

The European Commission in May approved a €291 mln state aid scheme for Romania’s heavy industry. According to a Commission document, the programme is financed through the country’s share of revenues from auctioning EUAs in 2019.
Romania’s Ministry of Economy, Energy, and Business Environment had not responded to requests for comment at the time of writing.

The ALRO facility is not the only industry in Romania that has faced insolvency issues as a result of higher carbon prices – a situation that is “worsening every year” for the country’s energy- intensive industries, according to Romania-based carbon consultant Casiana Fometescu.

Many of these facilities belong to local authorities and are often granted loans or borrow from municipalities to cover ETS-related costs before the carbon market’s annual compliance deadline at the end of April.
Romania’s chemical and fertiliser industries have been among the country’s most affected, with many of them declared insolvent or filing for bankruptcy over the past decade.

“Romanian industries have made a lot of investments in modern technologies to reduce their carbon intensity, but they can’t do too much to reduce emissions as long as they are still coal dependent,” Casiana Fometescu told Carbon Pulse.

At the end of 2019, 12 EU countries – Finland, Belgium, France, Germany, Greece, Lithuania, Netherlands, Poland, Slovakia, Spain, UK, and Luxembourg – provided some form of compensation to their industries for indirect ETS costs.
Czechia aims to start doing so (https://carbon-pulse.com/100649/) next year while Finland intends to stop. coal powered.

Romania generates around a quarter of its total electricity from coal, with power costs rising significantly as a result of higher EUA prices – at €29 on Wednesday – and taking a toll on the country’s state-owned energy companies.
The European Commission approved in February a €251 mln emergency loan (https://carbon-pulse.com/92983/) to utility CE Oltenia, Romania’s second biggest utility, to help the struggling firm meet its EU ETS obligations.
The state aid was approved under the condition that CE Oltenia was able to fully repay the loan six months later, or present a restructuring plan for the company. The utility this week submitted a 2021-26 restructuring and decarbonisation plan setting an objective to cut CO2 emissions by around 38%, with total investments amounting to €1.5 billion.
The strategy, CE Oltenia said in a statement (https://www.ceoltenia.ro/comunicat-118/?parent_page=142) , would partly draw funding from the EU ETS’s €14 bln Modernisation Fund, which supports mainly Central and Eastern European countries.

Romanian energy companies joined a call on June 8 (https://carbon-pulse.com/101000/) – together with utilities from Poland, Bulgaria, Croatia, Cyprus, Czechia, Estonia, and Hungary – asking for more compensation amid the EU’s plans to tighten its 2030 climate target to 50-55% below 1990 levels, up from the current 40%.
The companies argued that the increased 2030 target could push EUA prices to as high as €75, which would deliver proportionally higher costs to the bloc’s more fossil fuel-reliant economies.

They called for more financial support and a higher share of the bloc’s allowances to be auctioned during Phase 4 (2021-30) to be earmarked to help the EU’s poorer member states decarbonise.