Carbon Weekly Newsletter

This newsletter was published 29.3.2023 at 16:21pm CEST

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

Monday started with modest trading volume and low volatility, with stable price of EUAs at around 88 EUR. Auction offered some discount, which caused initial selling pressure, however market found support at Friday’s lows and slightly reversed to the upside. Major change came on Tuesday morning, when EU finally produced relatively final REPowerEU volumes, that will be sold on daily auctions in second half of 2023. Revised calendar is yet to be published, however volumes are known. Additional volume from MSR is expected to be roughly 16.5 million allowances, which would at average price of 80 EUR mean roughly 1.3 billion EUR of additional revenue for the program. Market reacted bullish to the news, since many participants expected larger additional volumes and 16.5 million allowances distributed during several months could be absorbed with ease, not affecting the price significantly. Despite less bearish outlook that has resulted in rally that has been going on for the last few days, auctions in current week still cleared below secondary market, suggesting mixed signals. During compliance buying period, EUAs find support easily, especially below 90 EUR mark, although it seems quite difficult for them to test or even breach 100 EUR again. Other markets in European energy complex have been flat during the last week and they are showing no signs of weakness. Panic in financial markets caused by issues in several major banks has settled down and bond markets have stabilised. Equities have shown resilience with benchmark S&P500 trading above 4000 points again.

German power prices are up by 5.00 EUR since last week, with the front year contract trading at 138.50 EUR/MWh. API2 coal prices are up by 5.00 USD since last week, with the Cal24 contract trading at 138.00 USD/tonne. EUR/USD is up by 60 points since last week and is currently trading 1.0850.

Price development of EUA Dec2023 futures contract

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