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This article has been reproduced by kind permission from Heren Energy LTD, having first appeared in ESGM 11115. Carbon weekly review: emission prices reach record levels in high
volumes The
European Union Emissions Trading market was subject to high
volumes and prices this week. A new record was broken on the OTC market on Thursday at EUR 20.50 per tonne of carbon dioxide equivalent
(tCO2e) for 2005 vintage allowances — EUR 0.25/tCO2e higher than its
previous all time high reached on 26th May. Total volume this week topped
4.5 million traded allowances, an increase of one million on the previous
week. Prices continued to rise on Friday with further all time highs
reached on all contracts. Allowances for 2005 delivery began trading at EUR 19.50/
tCO2e on Monday, gradually climbing up during the session to EUR
19.60/tCO2e. Tuesday’s trading levels rose again on Tuesday and
Wednesday with an average trading level of around EUR 19.50-19.70/tCO2e
and EUR 19.70-17.90/ tCO2e respectively. The steady climb in emission prices was attributed to
the general rising energy complex with rising European gas and power
prices — although participants continue to stress that specific carbon
drivers are hard to isolate. On Thursday, carbon prices continued their
ascension on the back of high gas prices leading to a widening of the coal
to gas differential. In addition, an announcement from an EU Commission
official urging member states to install further cuts an additional 290
million tonnes of carbon dioxide for phase on of the scheme sent further
bullish signals to the market. The Commission said that certain National
Allocation Plans (NAP) — which are yet to be approved — are “overly
generous”. The exchanges attracted around 1.7 million tonnes of
allowances this week, the most liquid so far. The EEX and the ECX saw
record volumes on Monday with 50,000 and 630,000 allowances, predominantly
for 2005 delivery, respectively changing hands at an average price of EUR
19.35/tCO2e. The Amsterdam-based exchange ECX announced this week that the
number of traders using the exchange had tripled in past two weeks. ECX’
commercial director Albert de Hann reportedly said that cement and steel
companies were increasingly selling on the exchange as carbon cost rose.
“Some of the large power users have relatively low abatement costs and
are able to implement changes in technology quick and efficiently (…)
they can save loads of CO2,” he said. Prices on the exchanges firmed
thereafter during the rest of the week — all verging towards the EUR
20.00/tCO2e mark, reached on Thursday. The NordPool saw a total of 125,000
allowances trade on Thursday over a EUR 0.50/tCO2e spread — 10,000 for
vintage 2005, 15,000 on its 2006 forward contract. Market News Discussions
picked up this week with regards to the remaining NAPs. The UK
Department of Trade and Industry (DTI) published plans this week to
sequester CO2 emissions from onshore sources in order to bury them in
depleted oil and gas fields in the |
