This newsletter was published 27.4.2022 at 16:11pm CEST

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

Volatility caused by the news of Russian decision to halt gas exports to Poland and Bulgaria has hit all major energy related markets on Tuesday afternoon. Moves in already tight gas and power markets were violent, especially in front month products. Sudden price spikes of more than 20 percent might indicate how sensitive and fragile are those markets in current geopolitical environment and how near can possible escalation be. Carbon emission allowances reacted negatively to the news, as December 2022 futures contract fell by 2 EUR yesterday and gapped down today at the opening. Price reverted from 78.80 EUR, which might have been caused by several factors. Selling activity was exhausted when price reached technical support and compliance might be still purchasing EUAs before deadline. Another factor to consider could be remarks of EU ETS reform, made by German MEP. It was suggested that lawmakers might try to impose some limits on speculative trading in EU ETS. According to ESMA report, speculation has not caused severe discrepancies in pricing and opinions in the European parliament about additional regulations are still divided. Interest on primary auctions is slowly decreasing, however price dips still attract a lot of buyers, as seen on today’s Polish auction. At current price rates for Cal23 Coal and Cal23 German power, EUAs could be trading at bargain, especially if we are going to experience gas import disruptions in the coming months and if economy would need to rely on other fossil fuels.

German power prices are down by 1.50 EUR since last week, with the front year contract trading at 201.50 EUR/MWh. API2 coal prices are down by 24.65 USD since last week, with the Cal23 contract trading at 225.35 USD/tonne. EUR/USD is down by 300 points since last week and is currently trading at 1.0550.

Price development of EUA Dec2022 futures contract