This newsletter was published 29.12.2021 at 16:20pm CEST

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

Period after Christmas was quite volatile for EUAs, combined with very low liquidity. Daily trading ranges of 2 EUR or above have been usual, as well as volume spikes in both directions. Even though market appears to be range bound during holiday season, it is slowly but surely approaching 80 EUR again. Reasons could lie in major corrections in front month power and gas futures, which fell by more than 30 percent in the last week. Utilities and other participants in European energy complex might have more available margin now, and that could reflect in more EUA buying. Another reason for a slight rise could be low spot supply. Daily auctions will resume on January 10, after a twenty-day pause. Supply offered on coming daily auctions will be reduced in comparison to previous ones by a fair margin – almost 3.2 million allowances per month on average. Combined monthly (4-week) volume offered was 45.712.000 allowances in 2021, in 2022 it will be 42.480.000, roughly 7 percent less. Even though this information could already be priced-in, periods of extreme demand or low power generation from renewables, as seen in summer this year, could cause strong bullish moves in EUA in the coming year. After a wild run in 2021, we would like to take this opportunity to wish you a Merry Christmas and a Happy New Year. May 2022 be peaceful and joyful.

German power prices are down by 103.00 EUR since last week, with the front year contract trading at 223.00 EUR/MWh. API2 coal prices are down by 18.00 USD since last week, with the Cal22 contract trading at 109.00 USD/tonne. EUR/USD is up by 40 points since last week and is currently trading at 1.1350.

Price development of EUA Dec2022 futures contract