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