This newsletter was published 12.4.2023 at 17:26pm CEST

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

EUAs have shown their strength again after two auctions in a row cleared at 90.55 EUR, as we are approaching the end of compliance deadline. Installations and other entities included in EU ETS have to surrender EUAs for 2022 emissions until late April and that has been probably the main reason for persistent bullish trend. Despite that, daily trading volumes have been declining, while auctions still attracted some participants. EUAs are currently trading around 95 EUR per tonne for December-2023 futures contract, however market might be ripe for a correction after the deadline. Temperatures in Central and Southern Europe are getting higher, which could affect power production due to decreased demand. Some parts of the continent, especially Portugal and Spain are experiencing temperatures of 30 degrees Celsius already, while other parts of Europe heat up to around 20 degrees. Factors that might mostly affect pricing of EUAs near term could be weather, along with renewable energy generation and economic activity. On the other hand, there have been some events that will likely drive demand of EUAs higher. One of them is phase out of Germany’s final three nuclear power plants. This alone is expected to increase demand for EUAs in the long run, since more than 6 million allowances yearly will be needed to ensure sufficient coverage of emissions caused by gas and coal power plants.

German power prices are down by 6.90 EUR since last week, with the front year contract trading at 147.00 EUR/MWh. API2 coal prices are down by 8.50 USD since last week, with the Cal-24 contract trading at 127.50 USD/tonne. Front year gas prices are down by 2.635 EUR since last week, with the TTF Cal-24 trading at 54.650 EUR/MWh. EUR/USD is down by 20 points since last week and is currently trading 1.0960.

Price development of EUA Dec2023 futures contract