This newsletter was published 21.7.2021 at 4:47pm CEST

The current prices on the European carbon market are as follows:

Major global markets got hit by a shift in sentiment early in the week and EUAs have not been exempt from selling pressure. However, attempts to push it towards 50 EUR have failed and market returned into the recent range. Daily trading volume remains modest, appropriate for summer holiday season. Still, intraday volatility is high, reflective of lower order book liquidity. Some of the recent price action could still be driven by the last week’s news from The European Commission, which is considering a possibility to broaden and modify the scope or benchmarks for greener industries to get access to free allocations. The benchmarks so far mostly focused on fossil fuel use but in the future, green steel producers could be eligible for free allocation as well. The European Commission also published a long-term price projection for EUAs for the year 2030, targeting 50 to 80 EUR/EUA. Analysts expect that the upper target might get reaches sooner rather than later, considering that markets are already trading within range. As Europe experiences warm weather, floods, potential heat waves and proposed emissions reduction targets, demand for EUAs in the following weeks might increase. Additionally, auctions will get halved in the next month, as a standard measure to combat decreased market activity due to summer holidays. This period has historically kept markets supported.

German power prices are down by 0.90 EUR since last week, with the front year contract trading at 70.80 EUR/MWh. API2 coal prices are up by 3.00 USD since last week, with the Cal22 contract trading at 94.00 USD/tonne. EUR/USD is down by 30 points since last week and is currently trading at 1.790.

Price development of EUA Dec2021 futures contract