The CO2 Price
The carbon price experienced a large oscillation this week, falling on Monday, 09.09.2019, below 25 euro/EUA on the ICE ECX exchange in London and returning today, Wednesday, 11.09.2019 til 27.25 euro/EUA.
The causes of price fluctuation are multiple:
- a weaker energy complex;
- resuming normal auction volumes after reducing the volume by 50% in August;
- the first European Parliament sessions after the holiday;
- the uncertainty of Brexit.
Brexit and its effects
On Tuesday and Wednesday, last week, the British House of Commons passed a law that will force the PM Boris Johnson to ask the EU for a third Brexit delay until 31 January. The increased likelihood for the UK to reach a divorce deal lifted carbon.
The Brexit issue drags on and has not gotten closer to any conclusion. On 28 August, UK Prime Minister Boris Johnson announced that the British parliament will be suspended from 12 September to 14 October, as opposed to the planned closure from mid-September to 7 October due to Labour and Tory party conferences. Therefore, the carbon price is expected to respond stronger in September when the market gets a clearer view of the Brexit outcome.
There was also some speculation over whether the UK would be granted with another extension to the Brexit deadline to 31 January 2020. Numerous sources pointed out an extension into next year would very likely require the UK to carry out compliance for 2019.
Source: ICE ECX and AitherCO2