Issue CC

Carbon Newsletter

DBLM Solutions
27 Aug 2015

Auctions
The EUA Dec14 contract is currently at 8.13.
This issue represents the 200th publication of
DBLM Solutions weekly Carbon Newsletter.
This week the new bottom range was tested as we
saw the price bounce off the 8 mark. There is high
volatilty in the global markets recently, mainly due
to China. Over the last 5 years I have noticed that
volatile markets tend to sedate the carbon market
somewhat.
Weekly
Recap

ICE
EUA
Spot

ICE CER
Spot

ICE
EUA
Dec15

ICE CER
Dec15

27/08/2015

8.03

0.52

8.04

0.51

28/08/2015

8.02

0.52

8.13

0.48

31/08/2015

8.03

0.52

8.06

0.49

01/09/2015

7.96

0.51

8.03

0.49

02/09/2015

8.10

0.52

8.10

0.52

Volumes lots

7,574

43,248

889

Week %

0.87%

0.74%

0.196%

August was a volatile time for the European carbon

price. We hit a low of 7.76 and a high of 8.43
(EUA Dec 2015). Gains remain steady as the price
gradually rises, working through the relevant
ranges, over 4-6 month periods.
The EUA/CER spread widened this week to 7.58,
at close of business last night versus the 7.57
spread we witnessed last week and 7.80 the week
before.

EEX held auctions last Thursday, Friday & Mon.

Auction prices were
8.07, 8.04 & 7.89
respectively. The cover ratios for the above
auctions were 3.82, 3.13 & 3.46 respectively.
respectively. (Cover ratio = no. of bids divided by
auctioned allowances.

UK
This week we witnessed the UK revise their
renewable subsidy. In particular the feed in tarriff
will be reduced by up to 87% for solar PV projects.
The UK are heading in the opposite direction of
Germany who continue to suppport all forms of
renewable energy. The UK Department of Energy
and Climate Change (DECC) published the
proposals in their FIT review on the 27th August.
The cuts are penciled in for the first of January
2016. This may be seen by some as a calculated
move in order to give the UK a stronger financial
grounding before the world developed Nations will
pledge their emission reduction targets for post
2020 at the global climate talks in Paris in
December. Market definitions demand that
emerging markets move away from subsidies but
some fear that the move may be too soon. We will
hear that this cost is passed onto the end consumer,
but like the cost of fuel at the pump, the end user
rarely benefits from market parity prices when the
commodity cost regresses. This is not the first time
National governments have altered the terms of
power purchase agreements for renewable projects
and can have a profound effect on future
investment in the sector.

The contents of the Newsletter is not a recommendation, either implicit or explicit, to buy or sell emission permits.
Contact: David Boles, Compliance Markets -Direct: +3531 4433 584; Mob: +353 831747707
DBLM Solutions is partly funded by the Wicklow Enterprise Board.