Carbon market update

Wednesday 20 May 2020

Carbon Match Weekly - In the eyes of the beholder - We're very close to surrender deadline now. We still have a few buyers looking to pick up against current year liability, with the backstop being the fixed price.

Last trade $24.90 for 50k best offer $25. If you're a seller anywhere around there please get in touch.

Yesterday an update posted on the MfE website made it clear that market participants will be none the wiser about future ETS settings ahead of the upcoming 31 May surrender deadline. Please note the announcement of the non-announcement.

There has been some confusion, to say the least, following the December consultation on ETS settings, in which it was proposed that the fixed price option for 2020 could be raised to $35 - effectively an average between the proposed price floor in the auctions ($20) and the proposed price ceiling ($50).

That proposal initially appeared to herald higher carbon prices, but when the Emissions Trading Reform (CCRA) Amendment Bill emerged recently from Select Committee, there was no mention of a mechanism to raise the fixed price option to $35. As it approaches its second reading, the headline number remains $25.

Officials note that the Bill still has several stages to go through and further changes are possible, but folks on both sides of the market are questioning the political appetite to peg carbon prices at a higher base using a $35 headline fixed price in the current economic climate.

In any event, if passed as it stands the Bill would see the fixed price option removed altogether - either when auctioning begins or by the backstop date of 1 January 2023.

Clear as mud? We'd all better wait and watch. Meanwhile as we said last week, the only way you can take matters into your own hands is to transact - whether that's spot on Carbon Match, forward agreements, or indeed, given that we are this close, using the $25 FPO while you know you still can.

Carbon Match - open now and between 1pm-5pm every weekday.


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