Issue CXV

The contents of the Newsletter is not a recommendation, either implicit or explicit, to buy or sell emission permits.
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Carbon Newsletter
DBLM Solutions
23 May 2014


The EUA Dec13 contract is currently at 5.23.
The rise in carbon prices from Tuesday to
Thursday is seen as speculative in nature and is not
supported by utility hedging strategies. The
predicted bearish correction has already started
from this mornings market opening. That said, the
decrease in emissions year on year and an increase
in the surplus (now estimated at 2.1 billion tonnes)
is not seen as a sustained bearish factor by the
majority of analysts.
Weekly
Recap
ICE
EUA
Spot
ICE
CER
Spot
ICE
EUA
Dec13
ICE CER
Dec13
16/05/2014 4.82 0.12 4.83 0.12
19/05/2014 4.70 0.12 4.74 0.12
20/05/2014 4.82 0.10 4.89 0.10
21/05/2014 5.12 0.12 5.15 0.12
22/05/2014 5.12 0.09 5.29 0.09
Volumes lots 1,073 881 109,633 207,107
Week %

6.22% -25% 9.52% -25%

The EUA/CER widened this week to 5.03, at
close of business last night versus the 5.01 spread
we witnessed last week and 5.25 the week before.
Auctions
EEX held auctions last Thursday, Friday, Monday
Tuesday & yesterday. Auction prices were
4.75,4.72,4.60, 4.59 & 4.23 respectively. The


cover ratios for the above auctions were
7.30,6.75,7.33,4.84 & 4.02 respectively.
Market Reform
The European Commissions leading Climate
Change official, Jos Delbeke, stated that they are
open to the idea of bringing forward the proposed
market stability reserve The initial date
mentioned earlier in the year was 2021 but a sense
of urgency seems to have entered the debate after
emissions data shows an ever increasing surplus.
How effective this might be is another question as
industrial participants account for 1.2 billion of the
surplus. Real demand will be created by utilities.
The German Environment minister added It is true
that I suggested launching the market stability
reserve already as soon as 2016. From my point of
view, this should also include the shift of so-called
backloading volumes into the reserve. Both
measures would help to strengthen the EU ETS
quickly and sustainably. The German government
has no final position on these details yet, but we are
confident to come to an agreement soon.

According to what I hear so far from my
colleagues in other member states, there seems to
be a lot of support for measures to strengthen the
EU ETS already before 2020. People seem to
recognize that we cannot wait another six years to
reform this flagship instrument of European
climate policy.