Carbon Weekly Newsletter

This newsletter was published 28.9.2022 at 16:40pm CEST

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

EUAs are trading in large daily ranges again, as daily news drove volatility higher. The European Parliament’s environment committee struck a preliminary deal this Monday, seeking to source 20 billion worth of EUAs in the coming year and a half, by frontloading units on auctions. This caused prices to jump by almost 8 EUR in only one trading session, which represents a relative move of more than 10 percent. Since then, the whole move has been reverted, most likely due to possible bearish outlook European industry is facing. Power and gas remain elevated, compared to long term historical prices, and energy crisis solutions have still not tackled the main problem – lack of supply. Damage that has occurred yesterday on pipelines Nord Stream 1 and 2 in the Baltic Sea erased all hope that energy crisis in the EU could be solved if Russia’s aggression stops and gas flows get re-established. What’s more, German security agencies fear that both strands of Nord Stream 1 pipeline will be unusable forever. Possible positive outcome from the current situation is accelerated transition to renewable energy sources, however shortages on commodities markets are contributing to delays and higher costs. Also, renewable energy is often not stable enough to guarantee a continuous power generation, such as nuclear, gas or coal power plants can provide. Transition to repower EU is going to be financed by several sources, and one of them could be selling additional EUA volumes on auctions.

German power prices are down by 20.00 EUR since last week, with the front year contract trading at 502.00 EUR/MWh. API2 coal prices are down by 3.00 USD since last week, with the Cal23 contract trading at 279.00 USD/tonne. EUR/USD is down by 280 points since last week and is currently trading 0.9620.

Price development of EUA Dec2022 futures contract


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