A quick reversal of carbon prices

The European power spot prices inched up yesterday as forecasts of higher demand and falling wind production were mostly offset by expectations of improved French nuclear availability and increased hydro generation. The day-ahead prices hence averaged 233.85€/MWh in Germany, France, Belgium and the Netherlands, +11.38€/MWh day-on-day.

Easing uncertainties over the Russian gas payment in rubles and a comfortable gas supply from Norway and Russia weighed on the power forward market over the first session of the week, although the long-term prices managed to edge up thanks to a bullish opening only partly corrected in the afternoon.

The carbon prices recouped more than half of last week’s gains on Monday, driven down by bearish macroeconomic sentiment and falling oil prices amid strengthening anti-covid measures in China and US Fed’s increased interest rate. Some profit-taking following last week’s sudden and non-fundamental rise might have provided additional pressure on the emissions market. Plummeting by 7.5% from the previous session’s close, the EUA Dec.22 benchmark contract however found support in its 100-day moving average and slightly rebounded after hitting at the end of the day to eventually settle at 83.46€/t, -5.33€/t from Friday.

On the policy side, the European Commission updated its 2021 verified emissions preliminary data after market close yesterday. The EU entity stated that last year’s emissions from stationary installations rose by 7.3% to 1.311 billion tonnes, with a 8.3% from the power sector mainly induced by a significant gas-to-coal switch over the second semester and a higher demand compared to the covid-curbed load of 2020. Emissions from the industry rose by 5.2% but remained 1.9% below 2019 despite similar levels of industrial production in both years.