This newsletter was published 9.2.2022 at 18:12pm CEST

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

EUAs have been very volatile in the past days although the price did not change much week on week. Trading range was within 10% high to low since last Wednesday with many intraday reversals and zig-zag trading. Moves were mostly news driven. At first, colder weather forecasts coupled with French utility EDF estimating to reduce its nuclear power output by more than 3% in 2022 pushed prices up to reach new record levels. Later, news about Nord Stream potentially getting easier approval started driving prices lower. On top of that, once again word came out that EU politicians are weighing options to change the current price mechanisms that would limit the volatility of EUA and help utilities better plan their budgets. This means releasing more EUAs to the market If prices would rise too fast. This was a hot topic for the second part of last year as energy prices went parabolic. Markets reacted negatively every time at first, but then dismissed the news a few days later. Same thing happened now and market reacted strongly negative. Likely outcome is the same as last time, however in the very short term, market can keep selling off before it tries for new record levels again. Other energy markets were not as affected by this news and as long as gas and power prices stay strong, EUAs will have a hard time decoupling from them.

German power prices are up by 1.75 EUR since last week, with the front year contract trading at 138 EUR/MWh. API2 coal prices are up by 4 USD since last week, with the Cal23 contract trading at 117 USD/tonne. EUR/USD is up by 140 points since last week and is currently trading at 1.1430.

Price development of EUA Dec2022 futures contract