Carbon Weekly Newsletter

This newsletter was published 3.4.2024 at 16:46pm CEST

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

EUAs broke to the downside just after the Easter holiday as participants awaited the long-anticipated publication of verified emissions for 2023 by the European Commission. It is believed that year-on-year emissions contracted by roughly 14 percent, which might be attributed to several reasons. Some are macroeconomic, such as lower industrial output and fewer investments in the EU, while others tie directly to energy markets. Abundant gas supply in comparison to years before alongside favourable weather conditions and continuous investing in renewables have contributed to stabilisation of power and gas prices in the Europe. These reasons might have played an important role in keeping emission low, while preventing prices to spike to critical levels again. This week started with gap down in EUAs which was followed by aggressive selling that pushed carbon down by more than 2 EUR in only a couple of hours. Bearish sentiment was confirmed by falling gas and power prices simultaneously. Despite four-day auction pause, the first one of the week cleared well below secondary market, with one of the lowest cover ratios in years. Only 3.4 million bids were submitted and 24 out of 25 bidders were successful on the auction, indicating a lack of interest. Fundamental reasons for this bearish pressure remain prevalent. Temperatures are exceeding long-term averages; renewable power generation is healthy, which could be why markets in the European energy complex struggle to find and substantial support. In case of any major fundamental changes, markets can be still susceptible to short squeezes, however short covering in the past month has been very controlled and the market offered no major surprises to the upside.

German power prices down by 3.77 EUR since last week, with the front year contract trading at 77.58 EUR/MWh. API2 coal prices are down by 1.75 USD since last week, with the Cal-25 contract trading at 115.75 USD/tonne. Front year gas prices are down by 1.025 EUR since last week, with the TTF Cal-25 trading at 30.300 EUR/MWh. EUR/USD is down by 10 points since last week and is currently trading 1.0810.

Price development of EUA Dec2024 futures contract

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