This newsletter was published 4.5.2022 at 16:38pm CEST

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

Lack of liquidity and low daily trading volumes have shaped trading activity in EUAs. Market was trading in a range most of the time, until imbalance occurred on Tuesday. Buyers were able to push the price from 82 to almost 90 EUR in one trading day, with no big volume, similarly to what is happening in power market. It seems that EUAs are lacking sellers even after compliance deadline, while buying has strengthened. Auctions in May have been well covered so far, with last one almost reaching cover ratio of 3. For context, cover ratios above 3 were in 2021 seen on only four occasions. Macro-economic situation is getting more serious by the day, and it seems global markets will stay under pressure for a foreseeable future. Even though parts of China are in lockdown or facing it, energy demand across the globe remains firm. Alongside crude oil, natural gas and coal rose quite a bit in May, which might have helped recent rise of EUAs. Period of scarce energy supply might be therefore reflected in current bullish bias in emission allowances, not only in continental Europe, but in the United Kingdom as well. UKAs experienced similar trend to EUAs recently, most likely do to gas dependency and lack of sellers. European Commission published compliance numbers for 2021, which revealed that most of the companies fulfilled their obligations. The number of companies that missed the deadline were around 300, while last year it was around 400.

German power prices are up by 15.00 EUR since last week, with the front year contract trading at 216.50 EUR/MWh. API2 coal prices are up by 12.65 USD since last week, with the Cal23 contract trading at 238.00 USD/tonne. EUR/USD is unchanged since last week and is currently trading at 1.0550.

Price development of EUA Dec2022 futures contract