RECORD SETTLEMENT: EU Carbon Seen Implying Only a Portion of the Fuel Switch Price Surge to About 74 Euros a ton of CO2: Andurand (4)

Aug. 13-16, 2021 (LONDON): As gas and coal surged, the price required to spur a switch to the cleaner fuel next year jumped about 17 euros in the first 10 days of this month to about 74 euros a ton of carbon dioxide, yet carbon allowances only rose to about 58 euros.

In the last two days of last week, carbon prices slipped to about 55 euros a ton.

“You are well below the implied fuel switch for next year,” said Mark Lewis, head of climate research at Andurand Capital Management.

In the first 10 days of Aug., the carbon market “only factored in one third of the fuel switch price. As the gas price has gone up dramatically, carbon has lagged behind that,” he said by phone.

Compliance buyers of carbon allowances apparently have what they need for next year, Lewis said, citing utility Uniper’s data.

EU carbon futures rebounded to near record levels Monday (above 58 euros) as natural gas advanced.

Five Percent Jump

From ICE, in Euros per ton

Interesting/intriguing natgas Tweet:

Natgas up 7%

(Adds carbon record settlement, gas Tweet, Monday’s carbon, natgas price jump.)

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