Carbon returns to uptrend following retracement from all-time high in December

By Frank O. Brannvoll, Brannvoll ApS, Denmark 

The EUA Dec 21 saw an incredible 200 per cent rise during 2021 from EUR31 to EUR92. More recently, the market saw a sharp retracement down to EUR72 reflecting the energy complex as well as calls for measures against financial speculation. However, as a report concluded that no manipulation had been taking place, the market quickly started its uptrend again. Compliance buying increased as power producers are using more coal as this is the cheapest fuel compared to gas. Germany alone will emit 33Mt more in 2021, representing an increase of five per cent YoY.

EUA front-year contract (December 2021), 2019-21

Poland was again demanding a curb on financial trading – either on the volumes traded or the time they can keep a position, but this proposal found no support within the European Commission.

The market was supported as the auctions were on hold during December but started again January.

Furthermore, the new year brings fresh money into funds investing in the carbon market and financial players are still seen on the buyer’s side.

The December 2022 contract starts out at EUR85.50, only one per cent up when compared with the end of December 2021.

Resistance is found at EUR86 and EUR92, and EUR100 is expected during the year. Support is found at EUR80 and EUR75, and major at EUR69, the former top. The long-term trend is still upwards.

Brannvoll ApS forecasts for 2022 a trading range EUR65-100, with an average of EUR80.