Carbon Weekly Newsletter

This newsletter was published 15.2.2023 at 16:35pm CEST

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

The European parliament convincingly voted in favour of RePowerEU act on Tuesday afternoon. 535 members of the parliament voted in favour of 300 billion EUR worth package, 53 abstained, while 63 voted against suggested legislation. In order to accelerate transition and exit from Russian and general fossil fuel dependency, EU proposed such package to ensure sufficient funding that is needed. Funding will be secured from several sources, most controversial being EUA sales from Market Stability Reserve, as such mechanism could severely impact prices mid and long-term. Before additional supply translates into bigger volumes on auctions, member states will have to agree with additions as well. The amount coming from EUAs would total 20 billion EUR. After the news has been published, EUAs fell sharply. Despite obvious move by EU to flood market with additional supply, carbon remains well balanced if not supported. At the time of writing, EUAs reverted the whole move from yesterday and is eyeing 95 EUR again. Compliance buyers are slowly running out of time to purchase allowances for year 2022 and their activity could certainly fuel EUAs to go higher, especially since buying will take place in so short time frame. Additionally, winter seasons have been historically supportive of EUAs and it should as no surprise if carbon reaches new all-time highs in coming weeks.

German power prices are down by 2.25 EUR since last week, with the front year contract trading at 161.25 EUR/MWh. API2 coal prices are up by 10.00 USD since last week, with the Cal24 contract trading at 135.00 USD/tonne. EUR/USD is down by 50 points since last week and is currently trading 1.0680.

Price development of EUA Dec2023 futures contract

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