Carbon prices climbed above 80€/t on reassuring ESMA’s final report

The European power spot prices slightly increased yesterday with support from forecasts of weaker solar production and higher power demand, and firmer clean gas costs. The day-ahead prices averaged 247.41€/MWh in Germany, France, Belgium and the Netherlands, +19.09€/MWh day-on-day.

The carbon prices rose by 4% on Monday morning after the European Securities and Markets Authority (ESMA) published the final report of its investigation on trading behavior in the EU ETS, finding “no major deficiencies” and that “the evolution of carbon prices and volatility seem to have followed market fundamentals”. Although largely anticipated, the news appeared to reassure the market by playing down further the possibility of a market intervention which pushed prices back above 80€/t. The report also proposed several measures to improve the market’s transparency and to include possible trading position limits. Slightly retreating in the afternoon, the EUA Dec.22 eventually closed at 80.81€/t, +2.21€/t from Friday’s settlement. The short-term outlook of the emissions prices remains neutral for now due the speculators strongly dampened buying interest and the compliance players’ fear of a recession, both resulting from the on-going war in Ukraine. Firmer equities and the colder weather outlook might however provide some slight support today.

The power forward prices traded mostly rangebound yesterday, getting little direction from the gas market amid still large uncertainties. A late rebound of gas prices could however push the power prices slightly up this morning.