Carbon Weekly Newsletter

This newsletter was published 21.9.2022 at 16:13pm CEST

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

EUAs have been mostly pinned around 70 EUR for the past few weeks, oscillating in narrow daily ranges of a couple of euros. Quarterly option expiry has been uneventful, since options have much lower open interest for September expiry than December – most important of the year. Market usually found many willing buyers when price came close to 70 EUR, while lacked momentum to push to 75. Even though EUAs found sort of equilibrium, there is a lot of uncertainty, which could unveil in the coming days. Power and gas prices remain supported after retracement, regardless of massive liquidity injections EU member states have provided to utilities. Uniper, one of the EU’s largest, has even become nationalised due to extreme situation they happened to get in, as a result of limited gas supply and high costs. Energy shortage is real and such issues could not be solved only by supporting demand side. On the flip side, gas storages are more than 86 percent full on average, which is encouraging in some sense, however it may not be sufficient to get through coming winter without power or, in worst case, heating outages. Some of member states and EU parliament parties have suggested an intervention in EU ETS, to finance renewables or limit the impact EUAs have on pricing power produced from fossil fuels. Suggestions are to cap price of EUAs for one year or sell additional EUA volumes from Market Stability Reserve. Others would like to keep EU ETS for what it was designed to do. That is an important and efficient market to fight climate change and finance transition to renewables in the long term.

German power prices are up by 5.00 EUR since last week, with the front year contract trading at 522.00 EUR/MWh. API2 coal prices are down by 25.00 USD since last week, with the Cal23 contract trading at 282.00 USD/tonne. EUR/USD is down by 85 points since last week and is currently trading 0.9900.

Price development of EUA Dec2022 futures contract


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