This newsletter was published 8.9.2021 at 17:10pm CEST

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

Carbon emission allowances have firmly anchored above 60 EUR and created new all-time high, at 63.35 EUR/EUA. Many speculate that bullish trend continues due to steadily increasing power prices, along with gas and coal. Recovering European economy has created strong power needs and generation from renewables could not meet the demand. Reliance on weather conditions has shifted focus on more reliable power sources. Even though fossil fuels are carbon intensive, they seem for now the only option, along with nuclear power plants, to generate enough power for expanding economy. Gas supply continues to be tight and Russian inflows to Europe might not increase drastically even when Nord Stream 2 becomes fully technically operational. Worldwide lack of supply of natural gas and coal might push the prices even higher, since there is no real evidence of consolidation in the market. Many analysts think that the real risk in energy commodities and EUAs remains to the upside, especially if Europe experiences longer period of colder temperatures, similar to last winter. Another reason for expected increase in volatility might also be nearing of quarterly option expiry, which could cause one-sided moves at the month’s end. Daily trading volumes and overall liquidity have been recovering in the recent weeks after slower summer markets.

German power prices are up by 5.65 EUR since last week, with the front year contract trading at 93.60 EUR/MWh. API2 coal prices are up by 6.00 USD since last week, with the Cal22 contract trading at 122.80 USD/tonne. EUR/USD is down by 30 points since last week and is currently trading at 1.1810.

Price development of EUA Dec2021 futures contract