EU Market: EUAs creep to 3-week high as German coal plan kept alive

Published 17:24 on June 10, 2015  /  Last updated at 15:07 on May 11, 2016  /  EMEA, EU ETS  /  No Comments

European carbon firmed for a fourth consecutive day to hit a three-week high on Wednesday, as news that Germany continues to mull forcing its oldest coal-fired power plants to buy EUAs supported prices.

European carbon firmed for a fourth consecutive day to hit a three-week high on Wednesday, as news that Germany continues to mull forcing its oldest coal-fired power plants to buy EUAs supported prices.

Front-year EUA futures ended the day at €7.63, up 3 cent’s on Tuesday’s settlement. Liquidity was light at 7.3 million units traded, and the trading range was very narrow at between €7.56 and €7.64, which was the highest price since May 19.

Germany is still considering imposing a levy on ageing coal plants that breach fixed emissions limits, Reuters reported, as the country strives meet its 2020 CO2 reduction target of 40% below 1990 levels.

An initial outline of the proposal suggests that facilities that exceed the caps would need to buy EUAs to cover their excess output.

Traders couldn’t identify exactly who was behind most of today’s wispy EUA buying as transaction volume was predominantly done on ICE’s screen contracts, but they said the news also hit calendar-2017 and 2018 German baseload power prices.

They were down 0.7% and 1.0% respectively, but their impact on corresponding German clean dark spreads was muted by a higher euro and flat DES ARA coal prices.

The UK earlier in the day sold 3.123 million spot EUAs for €7.52 each, in an auction that cleared a cent below market and attracted total bids worth 7.78 million units.

The EU and Germany will sell a further 6.12 million allowances over the next two days, capping a week that will see some 15.1 million units come to market, or some 6 million more than last week.

Auction volumes dip next week to 11.95 million, before climbing back to 15.1 million in the final full week of June.

By Mike Szabo – mike@carbon-pulse.com

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