CO2 Market – 26.01.2021

EUA Price

The price of the EUA certificate on the ICE ECX London stock exchange closed Friday, 22.01.2021, at 34,63 € / tCO2, and opened this morning (26.01.2021) the EUA trade sessions at 32,95 € / tCO2.

This compliance period is particularly difficult for many companies and most of the EU analysts expect a trading range of 31-36 eur/EUA for the next 4 months of trading.

Net-zero, carbon-neutral, carbon-negative – confused by all the carbon jargon?

You might have heard a lot of talk about “going net-zero” in the media lately. China recently announced it intends to achieve the goal by 2060. The European Union, the United Kingdom and New Zealand will go net-zero by 2050. In Australia, all states and territories have a net-zero strategy and the federal government is under pressure to make a national commitment.

You might also have heard references to “zero emissions”, “low emissions” and going “carbon-neutral” So let’s get clear on what all these terms mean in practice. To understand the term “net-zero emissions”, we must also understand what it is not. It should not be confused with the following related, but separate, concepts:

Zero emissions

This refers to a process where no CO₂ is released at all. In fact, in our current global mining and manufacturing system, no technology produces zero emissions.

Technologies such as solar panels and wind energy are often said to be zero-emissions but technically, they’re not. They have what are known as “embedded emissions” – those created in manufacturing the technology. However wind and solar produce no ongoing emissions after installation, unlike fossil fuel energy.

Low emissions

Generating greenhouse gases at a lower rate than business as usual. Examples include switching from coal-fired to gas-fired power to generate the same amount of electricity, but with fewer emissions.

Carbon-negative

This means removing CO₂ from the atmosphere, or sequestering more CO₂ than is emitted. This might include a bioenergy process with carbon capture and storage.

So, what are net zero emissions for countries or companies?

Net zero emissions

At the global or country level, we will achieve net-zero emissions when any remaining human-caused GHG emissions are balanced out by removing GHGs from the atmosphere in a process known as carbon removal.

When we are speaking about net zero emissions of companies, emissions are still being generated byt they are offset by the same amount elsewhere. The term „carbon-neutral” is sometimes used instead of net-zero, and they broadly mean the same thing.

The move towards net-zero is crucial to avoid a climate catastrophe. And the time to move is not tomorrow or “by 2050”. It is now, as most of scientist affirms it.

Source: ICE ECX & Energy in Demand, London

CO2 Market – 05.01.2021

EU ETS begins 2021 with record highs

EU emissions trading system (ETS) allowances made a strong start to 2021, rallying to all-time highs in the first ans second week of the year, after taking direction from upward moves in the wider energy complex and on a backdrop of constricted permit supply.

The EU ETS December 2021 contract ended week 1 at €34.91/tCO2, the highest close for the front-year product since the EU ETS began. This was up by €2.19/t CO2 from where it ended 2020, marking the contract’s 10th consecutive week-on-week rise and its largest since the week beginning 24 August.

The prices went up in the second week till €35.65/tCO2 on 12.01.2021 and, then started to decrease. The EUA price on the ICE ECX exchange from London has been trading today, 18.01.2021, at €32/tCO2.

EU ETS emissions see big drop in 2019, latest EEA assessment shows

In 2019 the number of EU ETS emission allowances auctioned decreased by 36 % compared to 2018. However, total revenues from auctions increased by EUR 447 million because of higher carbon prices.

The EEA briefing ”The EU Emissions Trading System in 2020: trends and projections” found that the drop in emissions from facilities covered by the EU ETS was again driven by a strong shift in the fuels used for electricity generation, from coal towards less carbon-intensive energy sources such as gas and renewables. However, emissions from aviation, also covered by the ETS, continued to increase (1 %), reflecting the increasing demand for air travel in 2019.

The observed reduction in emissions between 2018 and 2019 was due to the increased price of CO2, which made coal less attractive, combined with the rising share of renewables in the total energy supply. Many countries also saw a switch from coal to natural gas.

Continued decreased in EU ETS emissions have been forecast for 2020 and 2021, but these projections do not take into account some of the most recently planned measures, and the impact of COVID-19 pandemic.

Source: ICE ECX, London & EEA, Paris

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