EU Emissions Trading: News & Information of the calendar week 15/2008
EUA-Dec08 breaks through 24 Euro barrier - Record crude and rising EU-carbon emissions support EU Allowances - sCER-Dec08 trades at EUR 16.25 - EUA/sCER spread widens to EUR 8+
The EUA phase II market gained 1 Euro on the back of higher than anticipated EU-carbon emissions of the year 2007 last week Wednesday 2nd of April, but come under pressure by record coal prices (front month API2 plus $4.50 at $129,50/t) on Friday afternoon and eventually closed the week at EUR 23.31.
Bullish crude and UK gas markets provided direction for carbon on Monday 7th of April with the reference contract EUA-Dec08 reaching an intraday high of EUR 23.90. Carbon fell back on heavy profit taking to trade around EUR 23.50 after some unsuccessful attempts to establish itself above the 24 Euro level and moved sideways until Thursday 10th of April.
On the back of Brent crude rocketing to $109/bbl and German power hitting an intraday high of EUR 65.40/MWh the EUA-Dec08 contract easily broke through the 24 Euro barrier to hit an intraday high of EUR 24.62 and eventually closed at EUR 24.44 - EUR 1.13 above last week's close.
EUA-Dec08:
|
Close last week
|
Intraweek-Low
|
Intraweek-High
|
Close Thursday
|
Change
|
|
EUR 23.31
|
EUR 23.18
|
EUR 24.62
|
EUR 24.44
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+ EUR 1.13
|
The phase I market remained in its extremely illiquid state with a few 100k Spot-EUAs changing hands at 1-2 Euro-Cents.
EUA-Spot:
|
Close last week
|
Intraweek-Low
|
Intraweek-High
|
Close Thursday
|
Change
|
|
EUR 0.02
|
EUR 0.01
|
EUR 0.02
|
EUR 0.02
|
+/- EUR 0.00
|
The market for secondary CERs benefited only marginally from the EUA rally with the sCER-Dec08 price climbing some 40c from EUR 15.85 (Friday 4th of April) to EUR 16.25 yesterday evening widening the EUA/sCER Spread to more than 8 Euros.
Reasons for the EUA and sCER markets drifting further apart:
- Lasting uncertainty regarding the demand of project based carbon credits in phase III of the EU ETS (past 2012)
- If EU-carbon emissions continue to climb on a level similar to the year 2007, the demand for EU Allowances will be un-proportionally higher than the demand for project based credits. With the EU limiting imported volumes of project based credits (ERU/CER) into the EU ETS and the cap being left unaltered while carbon emissions are on the rise, EU Allowances will trade at a hefty premium to project based credits, whereas the EUA price will ultimately be defined by fuel-switching levels (which currently are calculated to by somewhere around EUR 35/tCO2e).
In the market for primary CERs some large volumes were offered on a per-bid basis with a pool of Chinese wind-farm projects offered by a credible counterparty seeing bids up to EUR 13.00 / CER. There seems to be a general widening of the spread between primary CERs from relatively small hydro- or landfill-projects to large wind- or industry-projects with large buyers preferring the latter as the attached project- and delivery-risks often can be considerably reduced when acquiring CERs from experienced counterparts.
CER-Dec08:
|
Close last week
|
Intraweek-Low
|
Intraweek-High
|
Close Thursday
|
Change
|
|
EUR 15.85
|
EUR 15.80
|
EUR 16.30
|
EUR 16.25
|
+ EUR 0.40
|
|
EU Allowances: Current Price Range
|
|
Bid
Ask
|
|
Reference
|
Quantity
|
Price (Euro)
|
Vintage
|
Other Terms
|
Reference
|
Quantity
|
Price (Euro)
|
Vintage
|
Other Terms
|
|
EUA-Spot
|
10.000
|
0.01
|
2007
|
|
EUA-Spot
|
10.000
|
0.02
|
2007
|
|
|
EUA-Dec08
|
10.000
|
24.30
|
2008
|
|
EUA-Dec08
|
10.000
|
24.40
|
2008
|
|
|
CER-Dec08
|
10.000
|
15.95
|
2008
|
|
CER-Dec08
|
10.000
|
16.50
|
2008
|
|
|