The European CO2 Market – 07.07.2020

EU Market: EUAs surge to 2020 high near €30 on speculative buying, short-covering

EUAs surged to €29,39 on Tuesday evening, 7th July, at ICE ECX exchange from London to hit their highest so far this year, rebounding by almost 50% from early March as speculators buying drove a strong auction result and widespread short-covering.

Several EU environment ministers voice support for higher 2030 emissions goal

A number of EU environment ministers on Tuesday, 23rd June, backed a 2030 EU-wide emissions reduction target of 55% below 1990 levels, with some nations even wanting to raise the bloc’s ambition still further.

The incoming German presidency of the Council of EU member states will keep climate policy and the bloc’s carbon market high on the agenda, as Berlin will be responsible for fostering agreements among EU nations over an upgraded level of ambition for 2030.

German Chancellor Angela Merkel endorsed the proposal by the European Commission to raise the bloc’s greenhouse gas reduction target for 2030 to between 50 and 55%. Moreover, the French President Emmanuel Macron will put forward in September new climate legislation based on citizen proposals and push for more climate ambition at EU level.

Global energy emissions growth sees dip in 2019 as coal’s role fades – BP source

Global CO2 emissions from energy use grew by 0.5% in 2019, only partially unwinding the unusually strong 2.1% rise in 2018, oil major BP said in its annual energy review published on Wednesday, 17th June 2020.

Source: Carbon Pulse, Thomson Reuters, London

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The CO2 Market – 01.06.2020

Change of outstanding rights from CERs to EUAs certificates

We have noticed in these months that some of Romanian operators have not used the opportunity to exchange the outstanding rights they have in their emissions Registry account and swap them from CERs into EUA certificates.

In accordance with the EU Regulation no. 1123/2013 of the Commission on determining the right to international credits under Directive 2003/87 / EC of the European Parliament and of the Council, installations in Romania older than 2012 are entitled to 11% of the total allocation 2008 – 2012 to convert from CER certificates into certificates EUA or 4.5% for new entrants and aviation. These rights are automatically calculated by the Registry software and displayed in your Registry account.

We remind you that the right of swap expires on April 30, 2021, the date of compliance with the phase III EU ETS, and the possession of CER certificates and their exchange into EUAs are no longer allowed in the phase IV (2021-2030).

Therefore, we recommend you to check your  Registry account, and if you still have outstanding rights, to perform the SWAP operation that does not involve any financial effort on your part, but especially could generate substantial amounts of “cash” for the company in this difficult period.

The price of the EUA certificate on the ICE ECX London stock exchange closed yesterday, 01.06.2020, at 20.97 euro / tCO2.

For additional information regarding the trading procedure on the conversion of CERs into EUAs, please contact us at: info@carbonexpert.ro or 0744760710.

Source: Carbon Expert & Bloomberg

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The CO2 Market 12.05.2020

Seal of approval for Romania state aid

The European Commission on Monday, 11.05.2020, approved a state aid request from Romania to partially compensate its energy-intensive industries from higher electricity costs as a result of the EU ETS. The scheme will cover the period 2019-20, with a provisional budget of approximately €291 mln (RON 1397 mln). This makes Romania the 13th EU nation to compensate for indirect costs, which currently does not have a harmonised system and is subject to the 27-nation bloc’s state aid guidelines.

EU ETS non-compliance rises in 2019

More than 300 installations and airlines failed to meet their obligations under the EU ETS in 2019, according to data published by the European Commission on Monday, 04.05.2020, with the non-compliance rate jumping by nearly 50% since last year.

EU to withdraw another 332.5 mln carbon allowances from ETS after supply glut drops 16%

The EU will be withdrawing 332.5 million EUAs from circulation in the 12 months from 1 September 2020, the European Commission announced last week on Friday, 08.05.2020, on the total number of allowances in circulation (TNAC). The units will be placed in the Market Stability Reserve. This number is down from the 397 million being withdrawn at present, but again represents 24% of TNAC.

EU Market: EUAs ease, stick around €19 amid lack of driving forces

European carbon prices eased on Monday, 11.05.2020, as competing bullish and bearish forces and a general lack of strong drivers continued to keep prices stuck around €19.

EUA Dec-20 increased by €0.38 last week and closed at €19.35 (+2.00%). Traded volumes decreased compared to the previous week with 93.7Mt versus 107.9Mt exchanging hands on ICE ECX across contracts.

Screenshot 2020-05-12 at 06.42.54

Source: Carbon Pulse and Clear Blue Markets, London

 

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The CO2 Market 07.04.2020

CO2 Emissions fell in the EU ETS by 8,7% in 2019

Greenhouse gas emissions regulated under Europe’s carbon market fell by 8.7% last year, preliminary like-for-like European Commission data examined by carbon analysts at Refinitiv showed.

Around 45% of the European Union’s output of greenhouse gases is regulated by the Emissions Trading System (ETS), the bloc’s flagship policy to tackle global warming by charging for the right to emit carbon dioxide (CO2).

The Refinitiv carbon analysts’ interpretation of the data found stationary emissions covered by the scheme such as power plants and factories, totalled 1.536 billion tonnes of CO2 equivalent (CO2e), down 8.7% on the previous year.

The fall was largely due to a drop in emissions from power generation as coal-fired output was replaced by gas-fired generation and renewable power such as wind and solar.

An UN study published on November 2019 showed that if the global CO2 pollution fell with 7,6% year by year, the Paris agreement goals could be achieved. Yet, the estimations of the international CO2 emissions reductions caused by Corona crisis are only of 5% compared to 1.5% after 2009 crisis.

CO2 Price increase in Europe

EUAs raced up by over €2.50 to top €20 on Monday, 06.04, as shorts scrambled to cover positions and as wider European markets rallied on signs of a slowdown in coronavirus cases, even as oil prices declined.

EUA Dec-20 increased by €1.57 last week and closed at €17.96 (+9.58%). Traded volumes decreased compared to the previous week with 115.5Mt versus 167.6Mt exchanging hands on ICE across contracts. The total Open Interest decreased by 106.2Mt for a total of 783.6Mt due to the expiry of the March contract.

Source: Reuters Point Carbon and ClearBlueMarkets, London

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The Carbon Market 31.03.2020

Prices increased

The EUA Dec-20 price closed at €17.06 on Monday, 30.03.2020 (+4.09% than Friday, 27.03.2020).

EUA Dec-20 increased by €0.28 last week and closed at €16.39 (+1.74%). Traded volumes decreased significantly compared to the previous week with 167.6Mt versus 278.2Mt exchanging hands on ICE across contracts. The total Open Interest increased by 16.1Mt 22.00 for a total of 889.8Mt.

No delay of the surrender deadline

Although the EU Commission announced on Thursday, 26.03.2020 that there will not be any postponement of the CO2 compliance deadline of the EU ETS installations, which remains on 30 April 2020, our forecast is bearish on this week due to weak market fundamentals and the spread of COVID-19.

Screenshot 2020-03-30 at 20.19.21

Source: The European Commission, Brussels & ClearBlueMarkets, London

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The CO2 Market 24.03.2020

Last week, EUA prices witnessed a historic weekly crash of 27% and closed at a year and a half low of €15.54 on Monday, 23.03.2020.

Since the week prior, quarantine measures, travel restrictions, and business closures have significantly increased across the EU and will likely remain over the coming weeks at least. This has spurred fear of significant emission reductions to come in the EU market, causing the selling pressure to aggressively increase far beyond what the market buyers could handle.

Screenshot 2020-03-23 at 19.48.29

EU states, UK hand out a further 8.5 mln free EUAs for 2020

EU member states and the UK handed out a further 8.5 million free carbon allowances to industrial emitters over the past two weeks, according to updated data released late Friday, 20.03, by the European Commission.

Germany indicates leniency in EU ETS compliance deadlines due to COVID-19 crisis

Germany will take into account instances where EU ETS compliance deadlines have not been met as a result of the coronavirus outbreak and could grant clemency in some cases, the government announced on Friday, 20.03.

Poland to push for emergency EU ETS changes if virus impact persists

Poland may propose emergency EU reforms including ETS changes, the country’s climate ministry told Polish state media on Thursday, 19.03, aiming to reduce the burden on its economy as it comes under intense strain due to the Coronavirus.

Source: Carbon Pulse and ClearNewMarkets, London

 

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The CO2 Market 09.03.2020

News Update

Lombardy in quarantine  because of Corona virus and the state of New York asked for emergency. All commodities markets collapsed this morning at opening.

The carbon market collapsed to 22,37 Euro/EUA early in Monday morning, but went a little bit upper to 22,65 at mid-day. Last week prices also had a volatility between 23.24 – 24.04 Euro/EUA.

Markets Comment

All major markets in Asia moved higher on Thursday. In another milestone for China’s recovery, the yuan on Wednesday rose to 6.91 against the US dollar. While the spread of the virus continues to accelerate outside China, domestic outbreaks appear to have slowed significantly since mid-February. The resumption of work has returned as well as the movement of workers to some major cities and carbon consumption now returning to more than 70% of last year’s levels. The main assumption is that the virus in China will stop at the end of the first half. The huge volatility of markets and commodities has even led the Carlyle Group to delay Atotech’s IPO.

This is not the first time, however, that we have observed disruptions and events that are hindering global growth, but this is not necessarily bad, as there are arising significant opportunities.

Technical Analysis

We see the reaction after the announcement of interest rate cut in the US by 0,50% that showed how much it is affected by the liquidity flowing into the system and in conjunction with the compliance period. Area 23-23.3 is particularly important and only a significant deterioration in global growth  could possibly lead to break it. Technically most formations pointing lower, but that still has to be proven. Until then it remains trapped between 23-25.89 range and the 23-23.3 area looks attractive for buying.

Source: AitherCO2, London

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The CO2 Market 25.02.2020

The EUA price varied in the period 17-24.02.2019 varied between 24,04 – 25,79 Euro/tCO2.

The UK published the auction calendar on Friday, 21.02.202, and the output is that 123,4M units will be released in forms of auctions or free allocation from the United Kingdom from 04.02 – 15.12.2020, and the request for compliance of British installation is 127 M. The total effect should be slightly bullish.

The mild temperature of last week are almost over and soon it will be required to heat more on central Europe because of cold coming with the same bullish effect.

The week end was monopolized by information that corona virus is spreading in Italy and southern Europe which is having a temporary bearish effect on market, providing some interesting buying opportunities.

We expect the market to hit on this wave of temporary panic some levels around 25 Euro/EUA.

Screenshot 2020-02-25 at 00.12.07

Source: AitherCO2 and ClearBlueMarkets, London

For English, please press here.

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The International CO2 Market

Brexit Effects on the EUA Price

Brexit is coming into force, officially starting  on 1st February 2020. The country will enter a transaction period valid until the end of 2020. According to this, UK has been in EU ETS for the whole 2019 and only for 1 month of 2020. UK will most likely has to comply for 2019. In this case it has to issue also the free allocation and the auctionable EUAs. Depending on how fast it will release all those EUAs, it might be that the market will have an impact on the downside.

UK could issue EUAs in two different way: tagged EUAs or untagged. In the first case, EUAs won’t overflow the market. In the second case it might be the case.

In case no issuance at all happens and the UK only does a UK carbon tax, no overflow will happen and the market will grow up to 25 eur/ton.

There are still a lot of uncertainties, in any case the market deep achieved in these days can be a good buy opportunity for short industrials that has to buy for compliance.

The EUA price closed yesterday on the ICE ECX exchange from London, 03.02.2020 at Eur 23,12.

Tighter market in 2021 will attract investors back to EU carbon -analysts

EU carbon allowances will struggle to rise much beyond current levels until later this year, when a return of speculative investors eyeing a tighter balance in 2021 could propel prices to a record above €30, analysts predict, citing early signs of buyers potentially returning.

World’s carbon markets grow 34% in value to $215 billion in 2019 -report

Published 02:34 on January 22, 2020  /  Last updated at 16:45 on January 23, 2020  /  Africa, Americas, Asia Pacific, Australia, Aviation/CORSIA, Canada, Carbon Taxes, China, China’s National ETS, China’s Offset Market, China’s Pilot Markets, EMEA, EU ETS, International, Kyoto Mechanisms, Mexico, Middle East, New Market Mechanisms, New Zealand, Other APAC, South & Central, South Korea, Switzerland, US  /  No Comments

Global carbon markets grew by 34% in 2019 to hit €194 billion ($215.1 bln) in value, according to analysts at Refinitiv, marking a third straight year of growth and a nearly fivefold increase in two years.

In a report published Wednesday, the company said the value of almost every major carbon market worldwide had increased markedly year-on-year, in spite of overall trading volumes dipping by some 370 million tonnes or 4% to 8.73 billion tonnes.

A surge in allowance prices in the EU ETS was the primary driver for the rise in global carbon markets’ value, with the average jumping by some €9 to near €25 between 2018 and 2019.

The European carbon market – the world’s largest by volume and value – rose in worth by 30% to €169 billion to make up by far the largest share of the global total, despite a 12% drop in traded EUA and EU Aviation Allowance (EUAA) volumes to 6.78 billion.

Source: Rueters Point Carbon, London & IETA, Geneva

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The EU Finance for Climate Change 21.01.2020

Brussels proposes ‘just transition’ fund in €1 trillion green investment plan

The European Commission on Tuesday unveiled a €1 trillion investment plan to help meet the EU’s climate goals, seeking to divert 10% of the funds towards a “just transition” mechanism for fossil fuel-dominant regions, and potentially channelling aid to ETS installations. This measure could be among the first ones to help achieving the neutrality goal proposed before COP in December as the „European Green Deal”.

Key outcomes agreed at the UN climate talks in Madrid in December 2019

  1. Matters including Article 6, reporting requirements for transparency and “common timeframes” for climate pledges were all punted into 2020, when countries are also due to raise the ambition of their efforts.
  2. On 12-13 December, EU heads of state met in Brussels and agreed to make the bloc “climate neutral” by 2050. Despite resistance from Poland, which has until next summer to come onboard, the European Commission revealed a “European Green Deal”, which, if it becomes law, will commit at least 25% of the EU’s long-term budget to climate action.
  3. The conversation around Article 6 is technical and full of jargon, yet the way the rules are designed could “make or break” the entire Paris Agreement. This high-stakes situation was a key reason for failure in Madrid.

EUA Price increased

The carbon price opened, today, at €25,17/tCO2 at the ICE ECX exchange in London. EUA Dec-20 increased by €1.23 last week and closed at €25.44 (+5.08%). Traded volumes increased compared to the previous week with 120.9Mt versus 96Mt exchanging hands on ICE across contracts. The total Open Interest decreased by 6.3Mt for a total of 808.5Mt.

Screenshot 2020-01-20 at 17.43.46

Source: Point Carbon, Clear Blue Markets, London & CPLC, Washington

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