UNFCC COP 24 concludes in Katowice
The UN Climate conference ended in December 2018, after two weeks of intense negotiations on ways to put the Paris agreement into practice. One of the major discussion points included how to account for and record green house gas emissions. Crucial issues such as what countries would do to limit temperature rise to below 1.5 degrees as was stated in the IPCC report were ignored. A decision on carbon markets was pushed to next year’s COP meeting as countries failed to reach an agreement. Climate experts have criticized the agreements drawn from the conference as being inadequate and not urgent enough to address the climate’s current challenges.
Countries pledge tougher CO2 cuts
A group of developing countries, the EU, and Canada have committed at COP24 to set tougher targets to cut greenhouse gases and raise their countries’ targets by 2020. They have resolved to put in extra measures to go beyond what had been agreed upon at the COP conference. Practical ideas on how this would be done was however not discussed and how they intend to achieve these goals is to be seen.
Market Stability Reserve comes into effect as of 1st January 2019
As of 1st January 2019, the Market Stability Reserve will officially begin working. The MSR was set up to eliminate the surplus of emission allowances that has been accumulating in the EU ETS since 2009. 265 million EUAs will be placed in the reserve between January and August of 2019. Volumes will be significantly reduced in comparison to the previous years and this is expected to hike carbon prices as a result.
Yesterday EUA closing price on ICE EXC exchange from London was 22,84 Euro.
UK auctions and free allocations suspended
The European Commission has announced the suspension of all EUA sales issued by the UK as of 1st January 2019 until a Brexit deal between the UK and the EU is settled upon. This means that the UK will not auction or allocate allowances. Allowances already in circulation will not however be affected. The UK will leave the EU ETS immediately if a Brexit deal is not agreed upon. The absence of UK auctions and the German auctions that are yet to be confirmed is expected to keep prices high as the new year begins with less supply.
Our attention looks to next Tuesday, 17.01.2019, when the UK Parliament will vote the withrawal agreeement from the EU.
Source: European Commission, Brussels and AitherCO2, London