Speculation shoots up the price of CO ₂ and almost reaches 40 euros per ton

The European Union (EU) carbon market has broken records throughout the week due to speculative movements in the price of CO2. This Friday has registered new highs with CO2 at 38.57 euros per ton (€/t).

According to experts in this market from the firm Factor Trading, the price of carbon has risen by approximately 65% since the beginning of November. They stress that this week’s increases mark a rapid rise in the cost of emission rights, which has already soared in recent months as the EU strengthened its commitments to reduce emissions, along with the expected reform of the EU ETS to help achieve the new objectives of the European bloc.

“The EUA is being driven by two axes: the climate policies of the European Union and the growing interest on the part of investment funds. In the short term we could see new highs, the level of €40/t could be reached in the coming weeks. However, we do not rule out that there will be a technical correction or a collection of profits by investment funds in the short term, “explains Iker Larrea, director of markets at Factor Trading.

According to the company, the origin of this speculative move came in the wake of the publication of an article in Bloomberg on February 3, in which an analyst at the Andurand Capital Management fund said he believed the price of the EU ETS could skyrocket to 100 euros a ton this year. However, other analysts expect the price to remain close to €35/t during.

The auction of February 3 resulted in a result of more than €1.40/t above the price of the moment in the secondary market. The five winning awardees purchased a total of US€2,575 million Phase 4 at a price of €38/t.

The snowfall and frost in Spain that left the Filomena storm also triggered the price of light. The wholesale cost of electricity, which is set one day in advance, reached 95 euros on average per day per megawatt hour (MWh), according to data from the Iberian Electricity Market Operator (OMIE). This meant its highest level since January 11, 2022, when it stood at 103.76 euros.

Source: Five Days