Carbon Markets Weekly 23-27 February

Last week’s EUA price movement was largely dominated by policy events as the EU Parliament’s Environment committee voted in favour or an earlier introduction of the MSR on Tuesday (Feb. 24). According to Reuters Point Carbon, prices gradually edged up on Monday morning after the latest version of the leaked compromise amendments led to growing optimism that the largest political groups could form a ‘grand coalition’. The Dec-15 contract reached  €7.8/t in Monday’s session, the highest level in two years. Carbon prices retreated throughout Tuesday’s session since the results came in largely as anticipated, Reuters Point Carbon analysis says.

The front-year contract took a downward move following the ENVI vote amid profit-taking. Reports of industrial selling might have also contributed to the price drop following free allowances being transferred to companies’ accounts on 28 February.

Although there seems to be a sufficient majority on the Council backing the full transfer of the backloaded allowances into the reserve, a letter to the Commission sent by Poland and seven other member states on Wednesday (Feb. 25) confirmed that member states are still at odds when it comes to the start date of the MSR. The start date issue divides member states in two camps supporting either a 2017 or a 2021 start date. The Latvian Presidency is faced with the challenge of finding a solution to bridge these two extremes, as well as smoking out the views of the few member states still without a clear positions on the matter. Spain is the most prominent one in terms of voting power in the Council. The Presidency has called for working group meetings on 10 and 16 March. It seems determined to push for a swift adoption of a common Council position allowing for the trilogue to start soon, Reuters Point Carbon says.

The EUAs Dec-15 contract closed on Friday at €7.25/t, losing €0.24/t (-3.2 percent) week-on-week.

In the UN-backed CDM market, the CER contract for December 2015 closed flat at €0.39/t.

(Market analysis and data by Thompson Reuters PointCarbon, our data visualization using Tableau Public)