Strong but very short-lived reaction of EUAs on EC’s publication of Green Deal proposals

The European power spot prices slightly recovered after the French public holiday curbed the country’s power demand on Wednesday. The day-ahead prices for today reached 81.88€/MWh on average in Germany, France, Belgium and the Netherlands, +2.43€/MWh day-on-day.

The European Commission finally published its “fit for 55” legislative proposals to reach the recently raised EU 55% emissions reduction target by 2030. The reforms proposed include a more ambitious target for the EU ETS of 61% GHG reduction by 2030 from 2005 levels which would translate into a higher Linear Reduction factor of 4.2% (from 2.2% in the current design) and a one-off adjustment of the system’s cap reducing it by 117mt if implemented in 2024. The proposals however remain to be approved by the Parliament and Council, implying a legislative process expected to last at least one or two years. The carbon prices jumped by 3.26€/t (+6.2%) to 55.46€/t in the aftermath of the publication but quickly gave back all their gains as most of the reforms had already been leaked or were in line with the market’s expectations.

The power forward market reflected the carbon prices’ volatility but the short to mid term contracts eventually posted daily losses due to their more important late retreat while the calendar contracts remained overall stable.