Carbon Markets Weekly 9-13 February

European carbon market took an upwards trend supported by a rebounding energy complex and high demand for allowances at auctions. Developments regarding the EU ETS reform in EU Parliament sent additional bullish signals. According to Reuters Point Carbon, a meeting of shadow rapporteurs in the Parliament’s ENVI committee on Wednesday indicated the possibility for a compromise between the two largest groups, the EPP and the S&D,  regarding the Market Stability Reserve (MSR).

The rapporteur of the MSR file, Ivo Belet, reportedly proposed a compromise amendment that calls for the reserve to be operational by 31 December 2018 (a de facto 2019 start of operation for the MSR, according to Point Carbon analysts), but may leave the door open for an earlier start of the MSR. The proposal suggests that all 900 million backloaded allowances and any unallocated allowances should be transferred to the reserve. It also calls for 300 million allowances from the reserve to be monetised before 2020 to support breakthrough industrial technologies.

The political groups will have to respond by Feb. 17 whether they are ready to accept the compromise. The ENVI committee will vote on the MSR file on Feb. 24.

The EUAs Dec-15 contract closed on Friday at €7.84/t, up €0.7/t (+9.8 percent) week-on-week.

In the UN-backed CDM market, the CER contract for December 2015 closed at €0.44/t, up €0.01/t (+2.33 percent) compared to the previous Friday’s finish.

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