The EU ETS verified numbers for 2021 showed a 1.333Mta rise compared to 1.233Mta in 2020, which was the first increase since 2017, reflecting a higher use of coal and even diesel in the fuel complex. The higher coal price may reduce the compliance demand, but this depends on the price for gas substitution.
The financial participants in the market are down 85 per cent YoY in April 2022 and combined with a lower trading volume, this has set a narrow trading range.
The market may see some further buying for compliance at the end of April, which normally is a positive month for EUA prices.
The market is now driven by political news and how the energy mix looks in Europe in the short-term. Politicians are calling for more renewable energy but are realising now how administrative red tape is slowing this process. In addition, grid connections in Europe need a massive upgrade for the renewable energy sector to deliver results quickly. This may be the event to really push the green energy transformation forward. Nuclear power in Belgium has been prolonged and Germany is expected to do the same to reduce exposure to Russian gas.
The EUA Dec 22 price is seen at EUR80 with and expected range of EUR75-85.
Brannvoll ApS maintains its forecast for 2022: trading range EUR65-100, with an average of EUR80.
