Carbon Weekly Newsletter

This newsletter was published 16.11.2022 at 16:31pm CEST

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

Past week was relatively calm for EUAs, as market remained mostly range bound, with exception of sell-off to 70.50 EUR on Thursday. Selling on that day could be caused by the preliminary session of the European Parliament, where it was scheduled to discuss RePowerEU among other topics, however no new information came out. Consequently, prices reverted sharply the next trading day on strong auction and continuous buying activity in the afternoon, however market again found several willing sellers above 75 EUR. Price action has become very reminiscent of one around options expiries, with sharp intraday moves, that quickly revert to the mean. Before EUAs find a new trend that would persist at least for a few days or weeks, there needs to be a change in fundamentals. One might happen as soon as today after market close, when trialogue meeting to negotiate terms of RePowerEU is scheduled. Sufficient financing to ensure energy transition would be provided by additional EUA sales from MSR, however parties have not yet reached agreement about pace of frontloading. Faster than expected sales could result in faster drop in prices. Participation on daily auctions has come down a bit in the recent days, most likely due to warmer than usual weather and a sharp drop in energy consumption. Sources suggest that EU natural gas demand in first half of November fell by as much as 26 percent compared to historical averages, which might have affected EUAs as well.

German power prices are down by 9.50 EUR since last week, with the front year contract trading at 319.50 EUR/MWh. API2 coal prices are up by 15.00 USD since last week, with the Cal23 contract trading at 190.00 USD/tonne. EUR/USD is up by 340 points since last week and is currently trading 1.0380.

Price development of EUA Dec2022 futures contract

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