This newsletter was published 11.5.2022 at 16:54pm CEST

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

Just a few days before vote of limiting non-compliance market participation, senior MEPs have reached a deal with aim to reform EU ETS. It was reported that compromises were emerging on higher emissions reduction ambitions and limitations on financial institutions, mainly to curb speculation. The only participants allowed to trade in EU ETS would, by the new proposal, be utilities and financial intermediaries, purchasing allowances on behalf of compliance. Party coordinators are reported to have met behind closed doors, with goal to reach a common ground before May 16 vote and most importantly early June parliamentary voting. Proposals of centre-left alliance consist of greater emission reduction below 2005 levels, bigger one-off rebasing EU ETS emission cap and increased linear reduction factor from 2.2 to 4.2 percent. Linear reduction factor would not stay firm at 4.2 percent but would be increasing by 0.1 percent annually, according to the report. Those measures could provide long term support for prices and potential periods of lacking supply. Auctions in post compliance period remain well covered and usually clear in line with prevailing spot prices, showing buying interest is still high. European gas storages are filling with imports, however fears of insufficient quantities before winter remain present, especially since there is no sight of armistice in Ukraine.

 German power prices are up by 5.70 EUR since last week, with the front year contract trading at 222.20 EUR/MWh. API2 coal prices are up by 2.00 USD since last week, with the Cal23 contract trading at 240.00 USD/tonne. EUR/USD is unchanged since last week and is currently trading at 1.0550.

Price development of EUA Dec2022 futures contract