Quota price near 10 EUR/t

Early this week, the European CO2 quota price has once again started to rise significantly. The price is closing in on a milestone which has not been crossed for several years – 10 EUR/t.

So far, 2018 has been a very bullish year on the European market for carbon emissions. On the first trading day of the year, January 2, a quota cost 7.81 EUR/t, but since then, the level has increased explosively. During a few weeks in January, the quota price rose to 9.50 EUR/t, and was following a minor downside at a level around 9 EUR/t in the following weeks.

Early this week, the market has once again seen a very bullish momentum. Tuesday afternoon, a quota is traded at 9.69 EUR/t, and we are now getting close to the price breaking above the 10 EUR/t. The last time the quota price was above this level was back in the autumn of 2012, more than five years ago.

The reason why the market – which appeared to had stabilized around the 9 EUR/t – has once again started to increase, is that several of typical buyers appear interested in hedging now, instead of waiting. This can be interpreted as a signal from the market that there is a common expectation that the price will increase further soon, most likely above the 10 EUR/t.

The big upside on the quota market also affects the European electricity prices. Thursday afternoon, the German Cal-19 contract has gained 0.40 EUR/MWh, while the correspondent Nordic contract is up 0.72 EUR/MWh.