The Carbon Market – 29.06.2021

The EUA price on London based exchange ICE ECX opened on 29.06.2021 at 55.20 euro/tCO2, continuing its 5 weeks increase.

“Despite a week-long rally that has added more than 6% to EUA prices, carbon needs to rise even higher in order to restore natural gas’ advantage over coal in EU power generation”, updated news from Carbon Pulse 28.06 show.

EU ETS Free allocation up to €50 billion from 2008 to 2019

A new CE Delft study published on 7th June 2021 shows that the energy-intensive industry across Europe has profited up to €50 billion from 2008 to 2019 as a result of the free allocation of pollution permits under the EU Emissions Trading System (EU ETS).

The findings in the report from independent environmental consultancy CE Delft highlight the need to end this market failure as the EU carbon market rules are revised.

The sectors profiting most from pollution payouts are iron and steel, refineries, cement and petrochemicals sectors.

The report covers 18 EU countries and the United Kingdom. Most profits were generated in Germany, the UK, France, Italy and Spain.

The report identified three ways in which industry has secured a total of up to €50 billion windfall profits through the scheme from 2008 to 2019:

• Companies passed through the “costs” of freely obtained emission allowances in the product price, paid for by the end-consumer. For example in the iron and steel sector (€12- 16 billion) and refineries (€7 – 12 billion);
• Companies were awarded too many free emissions allowances that they could sell for a profit on the market. For example in the cement sector (€3.1 billion) and petrochemical sector (€600 million);
• Companies bought cheaper international offsets (until 2020) to comply with their targets and were able to sell remaining free allowances for a profit on the market. For example in the iron and steel sector (€850 million), refineries (€630 million) and cement (€610 million). These amounts should have been used to modernise the technology, in order to reduce the CO2 emissions, but they were ofen redirected to pay debts of companies.

More information on CE Delft analysis: Additional profits of sectors and firms from the EU ETS 2008-2019.

Source: Carbon Market Watch, Brussels

EU ETS News in June

EUAs climbed above €53 on Wednesday, 23.06.2021, gaining steadily for a third straight day as energy prices moved higher and buyers were not put off by a weaker auction result.

EU plans new social fund from expanded carbon market

The European Commission will create a ‘climate action social fund’ with revenues from an expanded carbon market if it decides to bring emissions from vehicles and buildings under the EU ETS, the bloc’s climate chief Frans Timmermans said. The discussions to include in the EU ETS the transport and building sectors are currently at the European Commission level.

Romania and Poland to start closing coal units from 2030

A leaked document from Brussels announced plans of Romania’s government to phase out coal till 2032.

Poland’s main utility, Belchatow, will start gradually closing lignite generation units at the largest emitting installation in the EU ETS from 2030, according to a draft plan published by the Lodz regional government Tuesday.

Germany targets EU aviation allocation in carbon price stance despite pandemic problems

Germany favours the rapid end to free EU carbon allowances for airlines, according to a leaked document, increasing the pressure on the sector as it slowly recovers from the pandemic.

Source: Carbon Pulse, London