DBLM Solutions

Luciano Magliocco +353 87 9051928 (Mobile) dblmluc (SKYPE) luc@dblmsolutions.com

DBLM Solutions Carbon Update

Carbon Overview

David Boles +353 86 1602115 (Mobile) dblmdavid (SKYPE) david@dblmsolutions.com

At time of writing the Dec '13 EUA Contract was at the 3.85, rebounding slightly from a morning low of 3.72. Accoirding to a new Draft paper on climate and energy policy, the European Union needs to cut GHG emissions by 40% and achieve a 30% renewable energy share by 2030. It is seen as a necessary step to reach the 80-95% reductions by 2050 which are already set out in carbon roadmaps. The paper is set to be published sometime in March. The 20:20:20 rule which seeks to cut GHG's by 20% from 1990 levels, increase the use of renewable energy to 20% of energy mix and improve energy efficiency by 20%. Only the first two are compulsory and lobbyists insist that the three actions are taking it a step too far. Today's auction at EEX of Phase 3 allowances has failed to reach its reserve price and as a result has been cancelled. This is the third failed auction of 2013 and has put a bearish slant on the price signal.These allowances will be evenly distributed through the next four auctions. It also been announced that EEX will auction a further 1,204,000 Phase 2 allowances from Lithuania's New entrance Reserve. The auction will take place beween 1-3pm CET on the 26 of March. Last week, EEX was awarded the contract for the permanent German auction platform. This means that EEX in co-operation with Eurex Exchange will conduct auctions for EUA's and Aviation allowances for the next three years with a possible 2 year extension. In 2013, a volume of 182,560,500 EUA's will be auctioned through EEX. An audit will be completed by the European Commission before the EEX transforms from its temporary role to the status of permanent allowance auctioneer. The Eurex Exchange may trade EEX carbon products through its existing structures.
Dec 13 EUA

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