10 February 2022

Today’s snapshot of where we are with EUA and UKA carbon allowance prices in relation to this year’s emissions reporting for aviation…..

EU Carbon
After hitting new record highs last week, EU Allowance (EUA) prices saw further gains early this week but struggled reach the much touted €100 mark before comments from the main EU ETS rapporteur (see below) caused prices to drop sharply yesterday
Traded EUA price ranges have been wide this week as the market bounced between €90 and €98
Reports on Tuesday morning that French utility EDF had downgraded its 2022 nuclear generation estimates caused EUAs to rally to a new record of €98.49 before falling back in late trading to settle at €96.93
Technical trading was clearly evident as one of the main drivers in price moves this week as computer led algorithmic trading took advantage of the volatility
EUA prices slumped 6% yesterday as the market reacted to an article from Bloomberg in which Peter Liese, the MEP responsible for the EU ETS reform under the “Fit for 55” package, suggested that changes were needed to make Article 29a more dynamic (Article 29a is a mechanism under which the EU can intervene following excessive EUA price spikes).
Dec-22 EUAs settled at €90.79 yesterday, a reminder of the nervousness around the market to policy intervention at these elevated levels and have dipped back below €90 this morning for the first time in 2 weeks.

UK Carbon
UK Allowances (UKAs) tracked EUA prices early in the week, albeit in a tighter trading range between £86-£88 per UKA, as the market positioned ahead of the 3rd auction of 2022
The nervousness in EU Carbon and all time high UKA prices no doubt contributed to a lower than usual auction participation (cover ratio of 1.44), which cleared at £81.81 – some £4 below the secondary market just before ahead of the auction.
Dec-22 UKA prices settled at £82.28 per UKA yesterday and are holding similar levels this morning.

Source: CF Partners