This newsletter was published 3.6.2021 at 4:40pm CEST

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

On the latest of May, The European Commission published the document about cross-sectoral correction factor (CSCF) for the period from 2021 to 2025. CSCF is the mechanism for ensuring that free allocation of EUAs remains lower than the preliminary allocation. It has been calculated to be 100% for the period, as stated in the note. The final number of free allocations will be published at the end of June, which will be the basis for the industry handouts this year. In the year 2020, the number of free allocated allowances was reduced by almost 18 percent, following decreased economic activity and power needs. In comparison to mid-May trading volumes, activity in EUAs declined probably because of a few auction-free days and partially of stable sentiment in the markets. Price of EUAs traded in a narrow range at the beginning of the week, with lowest daily volume in the year thus far. Trading day on Tuesday started with opening bullish gap and the traded above 52 EUR/EUA, however the market rejected higher prices, most likely because of two auctions that are held on Wednesday. Smaller Polish auction and larger UK auction have put a selling pressure in the market as more than 8 million allowances combined will be offered to the market. As the UK auction is held every two weeks, we can expect more sellers in the market every other Wednesday.

German power prices are down by 2.30 EUR/MWh since last week, with the front year contract trading at 63.80 EUR/MWh. API2 coal prices are unchanged since last week, with the Cal22 contract trading at 81.15 USD/tonne. EUR/USD is 30 points down since last week and is currently trading at 1.2200.

Price development of EUA Dec2020 futures contract