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

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