Carbon Weekly Newsletter

This newsletter was published 1.12.2021 at 17:14pm CEST

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

Bullish run in EUAs continues on the back of recent statement made by new German coalition, which is seeking for EUAs to stay above 60 EUR. They stated they would push for minimum prices at European level, or at least domestically, if they fail at primary goal. This caused carbon to firmly anchor above 70 EUR level, which held even after fresh pessimistic covid news. Today market breached another milestone, with new all-time high at 78.43 EUR for EUA DEC-21 futures contract. Liquidity has returned after volatile week and velocity of the moves has been moderate for past few days. Nearing of yearly option expiry will likely cause some additional volatility in the coming days, even though open interest at the nearest strike prices has decreased a bit. For now, it might seem that EUAs could stay supported before option settlement, however milder winter could be a bearish factor to consider. Auctions in the past week have cleared around front month futures prices, offering no real discount. UK ETS has experienced far greater carbon price increase in comparison to EU ETS, which is causing regulators to discuss possible interventions. Some are speculating they would increase auction supply in 2022 or introduce a cap. New information regarding UKA is expected to be published in the following fortnight. Today’s UK auction cleared at 65.80 GBP, offering a substantial discount below secondary market. Considering all factors, it might indicate that coming winter could be cold and expensive.

German power prices are up by 6.50 EUR since last week, with the front year contract trading at 143.50 EUR/MWh. API2 coal prices are down by 25.50 USD since last week, with the Cal22 contract trading at 107.50 USD/tonne. EUR/USD is up by 145 points since last week and is currently trading at 1.1350.

Price development of EUA Dec2021 futures contract


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