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DBLM Solutions Carbon Newsletter 23 May.pdf

DBLM Solutions Carbon Newsletter 23 May.pdf

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Published by: David Boles on Jul 03, 2013
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07/03/2013

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Issue LXXXI

Carbon Newsletter

DBLM Solutions
23 May 2013
The EUA Dec’13 contract is currently at €3.28. The ICE exchange announced yesterday that they will relaunch their spot CER product on the 27th May, after two weeks of no trading facility. Today, we will take a quick trip around the world’s cap and trade emission trading schemes. In California this week, officials held their third auction, achieving record prices. The state sold 14.5 million allowances at $14 each last Thursday. On sale also, allowances that covered emissions in 2016, 7.5 million were sold at a discount of $10.71/allowance. Allowances in the secondary market witnessed healthy trade after the auctions, reaching the $14.50 level. To date the Californian auctions have raised $256 million for the state and $556million for utilities who must utilise the monies to keep end users costs reasonable.
Weekly Recap ICE EUA Spot 3.65 3.49 3.55 3.50 3.27 13,245 -10.41% ICE CER Spot ICE EUA Dec’13 3.70 3.54 3.60 3.56 3.32 65,704 -10.27% ICE CER Dec’13 0.39 0.39 0.37 0.38 0.34 4,760 -12.82%

16/05/2013 17/05/2013 20/05/2013 21/05/2013 22/05/2013 Volumes lots Week %

ongoing global climate negotiations. China is now responsible for a quarter of global industrial and power producing emissions. The announcement gives a much needed boost to a successful outcome in developing a satisfactory frame work for an international treaty to be agreed in 2015 and enforced by 2020. The third largest global emitter, Russia has regressed further this week, after backing out of Kyoto during the year. Officials have pointed to the EUETS as an example of cap and trade not working. The cost of the energy gap between the US and Europe is growing with cheap energy from shale gas adding to the mix. As the US is Europe’s main trading partner, Europe’s main energy policy makers have taken note. A revised call has been made to ensure energy policy post 2020 is determined sooner rather than later. It is estimated that if the European market becomes fully integrated a saving of €35 billion could be achieved annually in electricity costs in 2015 compared to 2012. This is why it is essential to have a well functioning carbon market to aid renewable investment. The EUA/CER spread narrowed this week to €2.98 at close of business last night versus the €3.24 spread we witnessed the week before and €3.15 the previous week.

Auctions
EEX held auctions last Thursday, Friday and Tuesday auction prices were €3.47, €3.55, €3.49 respectively. The cover ratios for the above auctions were 2.45,2.81 & 2.92 respectively.(Cover ratio – Amount of bids/actual volume). The ICE exchange also held their fortnightly auction of 4,134,000 EUA’s. This auction cleared at €3.43 / EUA. In total an extra 15,078,000 EUA’s were brought to the market place.

Over to China now. Good news from China with the announcement that they are set to impose a cap on their emissions for the first time in 2016. This move is declared as a tranformational boost to

The contents of the Newsletter is not a recommendation, either implicit or explicit, to buy or sell emission permits. Contact: David Boles, Compliance Markets -Direct: +3531 4433 584; Mob:00353 831744707 DBLM Solutions is partly funded by the Wicklow Enterprise Board.

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