EU Carbon Permits Have Bullish Start to Year, Rising Above 34 Euros a Ton (1)

By Mathew Carr

Jan. 4, 2021 — LONDON: European Union Carbon permits rise above 34 euros for the first time ever, getting a bullish start to 2021 ahead of a two-week cold snap.

They were up 3.4% to 33.82 euros a ton as of 11:19am, according to data on the website of the ICE Futures Europe exchange, having reached 34.24 euros earlier in the morning.

The region’s cold snap will boost demand for heating and electricity. Click link for loop here:

https://www.weatheronline.co.uk/cgi-app/weathercharts?LANG=en&MAPS=vtn&CONT=euro&LAND=__&ZEIT=202012281308&LOOP=1

Carbon is rising as lawmakers consider how to tighten the program and the region’s emissions targets. The move comes as the U.K. leaves the market.

Carbon traders will get additional options this year, with the ability to trade U.K emission allowances after Brexit.

South Korea is opening up its carbon system to financial institutions in the period from 2021-2025. See this: https://unfccc.int/documents/267683

As traders get alternatives, it’ll be interesting to see if they remain as compelled to place their money in the EU program, the world’s biggest by traded volume. Stock markets and Bitcoin are also rising as the world begins administering coronavirus vaccines.

Another factor underpinning prices in the EU carbon market this month is a delay in the start of daily auctions of allowances as the program moves into its fourth phase, which runs from 2021-2030. Auctions won’t start until Jan. 29, according to the EEX exchange that holds them.

That limits supply in the primary market and forces emitters to hedge financial risks in the secondary markets.

(Updates to add auctions, smooth garble in third paragraph, corrects percentage gain. Apologies for the confusion.)

Leave a Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s