7/28/2019 DBLM Solutions Carbon Newsletter 30 May.pdf

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Issue LXXXII

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:00353 831744707DBLM Solutions is partly funded by the Wicklow Enterprise Board.

Carbon Newsletter

DBLM Solutions30 May 2013

The EUA Dec13 contract is currently at 3.68.

Carbon hit a three week high yesterday lunchtime

after which it has regressed to current levels. The

recent price buoyancy is attributed to bullish

European power prices and positive soundbites from

the Spanish and European Peoples party (largest in

European Parliament).

If the vote in the European Parliament is successful

on July 2, member states will then vote on

backloading before it is adopted. For this to happen,

the measure needs 225 votes out of 345 country votes

to be ratified. Spain have 27, Germany 29 votes.

Spanish officials prompted that they may back thevote on July 2 and will make a decision in 2 weeks

time. It is believed that this decesion may give the

weight to either success or failure. I will keep you

posted.

Weekly

Recap

ICE

EUA

Spot

ICE

CER

Spot

ICE

EUA

Dec13

ICE CER

Dec13

23/05/2013 3.35 - 3.40 0.36

24/05/2013 3.51 - 3.56 0.34

27/05/2013 3.45 0.38 3.50 0.37

28/05/2013 3.59 0.38 3.65 0.39

29/05/2013 3.70 0.39 3.75 0.40

Volumes lots 327 0 65,129 3,665

Week % 10.44% - 10.29% 11.11%

In short, a minority of 91 votes is needed to stopbackloading and if Germany abstain they areeffectively voting against the measure.

The EUA/CER spread narrowed this week to3.31 atclose of business last night versus the 2.98 spreadwe witnessed the week before and 3.24 the previous

week.The International Emission Trading Association(IETA) have published a survey of its members(EUETS participants) which shows that price

expectations for phase 3 have dropped by 47%. Priceexpectation is 10 compared to 19 at the same timelast year for Phase 3. Respondents expressed concernat the mix of taxes, regulations and the EUETS thatthey currently face, driving up administration costs. Apositive note from the survey was that all respondentssaid the carbon price affected all capital cost

decisions.The head of UN Climate change, Christina Figueresyesterday stated that California and China havestarted talks about linking their respective carbonschemes. After last weeks announcement that Chinaare planning a national cap and trade scheme, manybelieve that the penny has dropped for China.Chinasministry of environmental protection estimated thatthe near irreversible environmental degradation thatChina has experienced in its quest for growth hadactually cost it about 3.5 % of gross domestic product

(GDP) in 2010 alone. The task ahead is monumental,it is estimated, at 5% GDP growth, by 2025 pollutionlevels will increase by 70%, due to coal consumptionand car ownership rising to 400 million vehicles from90 million currently.

Auctions

EEX held auctions last Thursday, Friday, Mondayand Tuesday auction prices were 3.20, 3.30, 3.41and 3.50 respectively. The cover ratios for the aboveauctions were 2.39,3.57,3.82 & 2.81

respectively.(Cover ratioAmount of bids/actualvolume). In total an extra 14,406,000 EUAs werebrought to the market place.