Carbon dioxide emission rights are the cheapest in two years. Here are the reasons

Luc Williams

Benchmarks over the last 12 months carbon futures contracts fell by 44%.

Futures contracts for CO2 emission rights for December on the ICE Endex exchange fell by 6.7% on Monday. to EUR 53.37 per tonne, the lowest level since August 2021. The current price is 33%. lower than at the beginning of the year.

Price of CO2 emission rights futures for December / Bloomberg

Marcus Ferdinand, director of analytics at Veyt, believes that the overvaluation of CO2 emission rights is an echo easing situation on energy markets and constant pressure from investment funds, which are increasing the portfolio of net short positions.

“As the European Commission lowers its economic growth forecasts for the euro zone, the prospect of a prolonged bleak macroeconomic picture is likely to continue to weigh on industry and therefore impact carbon emissions.”

Some market players they expect the declines to continue. According to data published last week, short positions of investment funds have reached a record level, and interest in carbon dioxide emission price drop options below EUR 50 has increased to over 10,000 lots this year, almost 10 times higher than at the beginning of December .

Veteran hedge fund manager Per Lekander told Bloomberg last week that the permits should be worth just 35 euros a tonne.


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