Issue CXCIX

Carbon Newsletter

DBLM Solutions
27 Aug 2015

China
The EUA Dec14 contract is currently at 8.10.
First resistance from the opening this morning is at
8.07, followed by support at 7.84 as we approach
the bottom of our current range. European power
prices are also rising which should add support to
the carbon price.
Weekly
Recap

ICE
EUA
Spot

ICE CER
Spot

ICE
EUA
Dec15

ICE CER
Dec15

20/08/2015

8.34

0.51

8.38

0.51

21/08/2015

8.35

0.50

8.20

0.48

24/08/2015

8.18

0.50

8.22

0.48

25/08/2015

8.25

0.50

8.26

0.50

26/08/2015

8.07

0.50

8.10

0.50

Volumes lots

760

55,795

824

3.23%

-1.96%

-3.34%

-1.96%

Week %

The EUA/CER spread narrowed this week to

7.57, at close of business last night versus the
7.80 spread we witnessed last week and 7.36 the
week before.

Auctions
EEX held auctions last Thursday, Friday, Monday,
Tuesday. Auction prices were 8.31, 8.31, 8.08,
& 8.22 respectively. The cover ratios for the
above auctions were 3.82, 3.13, 3.76 & 3.46
respectively. (Cover ratio = no. of bids divided by
auctioned allowances.

China, the biggest source of CO2 emissions

globally, accounts for more than 27 percent of the
worlds emissions. China is the first developing
country to control CO2 emissions through a capand-trade system. Once a national carbon market is
established, which could be as early as 2017, China
will overtake the European Union (EU) to become
the biggest carbon market in the world. The
Chinese market will significantly alter the balance
of power in global carbon markets in the mid-term.
Significant challenges remain, and the IFC, a
member of the World Bank Group, is helping
China to overcome them with a project in
Shenzhen that addresses key barriers to carbon
trading. The key pitfalls in the Chinese ETSs to
date are:
regulatory barriers, including a ban on
carbon futures by the China Securities and
Regulatory Commission (CSRC);
financial intermediaries not engaged in the
carbon market;
capacity constrains at local pilot exchanges
(e.g., spotty in-house trading experience, no
clearinghouse
capability,
weak
IT
infrastructure);
companies not yet clear on their carbon
position (long or short?) and their
abatement cost and, as a result, are not
likely to trade and;
companies largely unfamiliar with price
hedging strategies and traders may not be
incentivized to trade carbon.

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.