Global carbon markets are in a constant state of evolution. The market snapshot is produced monthly and provides a high-level overview of the key developments in select compliance and voluntary carbon markets.
*Please note: This snapshot is designed to provide a high-level overview of the key developments in compliance and voluntary carbon markets. Our in-market team produces daily and detailed updates and trade reports to CORE Markets software subscribers and clients. Contact us to find out more.
This month we cover key developments in the Australian, New Zealand and European carbon markets.
August ultimately became another volatile month, after the initial momentum that saw prices lift out of the July lows, began to fade.
Though the market was wide, and a trade level is yet to be set, the midpoint of the recent market was approx. A$43.00, representing a notable A$10.00 premium over generic unit prices at the time.
Throughout August, the NZU price experienced consistent, positive momentum. Traders entered the market with renewed optimism, driven by the government's recent update in alignment with the Climate Change Commission’s recommendations.
Midway through the month, the price received an additional boost with the passage of legislation aimed at tightening industrial allocations within the market. Opening at NZ$57.50, the price predominantly moved in a single direction, closing the month at NZ$70.50, representing a remarkable 22.6% increase.
The EUA price displayed indecision in the first third of the month, largely a reflection of the contrasting fundamentals in the European energy markets such as strong European gas storage levels and renewable energy generation in opposition to multiple unplanned gas field and processing maintenance outages as well as extreme heatwaves in Southern Europe.
The Futures price opened at €84.16 and rebounded between that level and a low of €81.76 up until 9th August.
The announcement of the Australian LNG infrastructure workers at Chevron and Woodside facilities voting in favour of taking strike action caused the benchmark European gas contract Sep23 TTF to rally by as much as 40% and contributed to the EUA's bullish movements, reaching €86.82 by the 14th August and hitting this month's peak of €88.92 on 22nd August; the rally being compounded by resilient demand amid strong technical signals and tighter auction volumes.
The latter third of the month saw prices come off however, as fundamental bearish signals such as weak industrial demand in the EU and high interest rates took hold, causing the market to eventually come to a close of €84.86.
Verra issued an update to its Verified Carbon Standards (VCS) program. The latest updates to the standard and its associated documents are designed to increase usability, transparency and integrity and align it to other major carbon market initiatives. This includes new versions of the VCS Project templates and new market labels for VCUs.
Verra is holding a series of webinars in September to provide market participants with an overview of the changes. Details here: Verra Releases Version 4.5 of the VCS Standard
VCMI is seeking proposals from consultancies to help develop indicators that determine and define whether a company is ‘On track’ to meet their near terms emissions budget. This piece of work is expected to provide additional guidance in the recently released Claims Code of Practice, and its ‘foundational criteria’ for companies seeking to make credible use of carbon credits as part of their climate ambitions.
The events outlined in this month’s update highlight the evolving nature of global carbon markets and the complexity of the net zero transition.
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