- CO2 price crash on the ETS: where does it come from, what is its impact?
- Sanctions against Russian oligarchs are difficult to implement
- IEA: EU can greatly reduce dependence on gas
- EU official: “we still have many ideas for further sanctions”
- EU to take in war refugees quickly
- Macron announces presidential candidacy
- Health data: legal interpretation and data governance biggest problems
- Network block against porn portal
- ECJ opinion: environmentalists allowed to sue against thermal windows
- Opinion: advertising on platforms – we need to talk about money
The price per ton of CO2 in the ETS has fallen by around 30 percent since the start of the war in Ukraine. However, the war seems to be only the trigger of the price crash. The causes lie elsewhere, as Lukas Scheid shows. Attempts at explanation range from panic selling to the previous overvaluation of the market to a newly ignited dynamic in the expansion of renewables.
In recent days, the EU has imposed sanctions of a gigantic scale on Russian elites and companies. Although it now wants to wait and see the effects before imposing more (read more in the news). But research shows how hard it is to actually hit Russian oligarchs with the sanctions. Indeed, many of the billionaires have their financial operations in Luxembourg, Luc Caregari explains.
German Economics Minister Robert Habeck (Greens) said yesterday that there would be no import ban on Russian oil, gas, or coal. He fears endangering the “social peace in the republic”. More on this in the news.
Lisa-Martina Klein
Feature
CO2 price crash in the ETS: causes and impact
For energy companies, it’s good news at a time when there is little such news. The CO2 price in the European Emissions Trading System (ETS) has crashed in recent days. While it stood at around €95 per ton of CO2 in the middle of last week, by Thursday, it had fallen to around €66. With electricity and gas prices rising for months, the relief this has provided is extremely small, but concerns about further price increases in the ETS have recently been enormous.
How big the impact of the price drop actually is for energy companies and industry depends on whether the price stays at the current level or whether emission rights soon become more expensive again. The price drop will have only a very limited impact on the chemical industry, explains VCI energy expert Jörg Rothermel to Europe.Table. Many companies had already stocked up on certificates for the moment. According to Rothermel, the wholesale price of electricity, in particular, could be somewhat dampened in the short term. “Whether companies will benefit is not something that can be said across the board. Many companies operate in whole or in part with long-term electricity supply contracts.”
Reasons for the CO2 price increase
The question arises as to the cause of the price crash. The war in Ukraine was the trigger, but the invasion of the neighboring country by Russian troops is not sufficient as an explanation. The NGO Green Finance Observatory assumes that it was primarily profit-taking on speculative positions. The theory: The market was overheated anyway; the price of €95 per ton of CO2 resulted from an overvalued market. Market participants in the ETS sold their overvalued emission rights in view of the war in Ukraine – the price fell.
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