Carbon emission market reaches 11-year high

The price jump on the European carbon emission market continues. Wednesday afternoon, the quota price was at the highest level we have seen for 11 years.

The European market for carbon emissions has refound the momentum from last week, and is now rising rapidly once again. During week 14, the market increased by 15 %, and in the beginning of this week, the upturn has continued. Wednesday afternoon, the benchmark quota contract closed at a price of 26,13 EUR/t. This means that the quota price has now increased by more than 20 % in just one and a half week, and the price level is now the highest the market has experienced since 2008.

For a long time, the market has followed the Brexit negotiations closely, and following the last weeks’ votes in the British Parliament, it now seems likely that the UK and the EU will agree on an extension of the British membership of the union. This time, the extension will likely be at least one year, and will include a British participation in the European Parliament election in June. This means that the fear of a no-deal Brexit has decreased, which has caused the positive sentiment on the carbon emission market to return.

Buying interest on the market has increased, and Brexit can not be given all the credit for an increase of more than 20 % in this short time. Speculative trading among some of the largest players on the market is probably a part of the reason as well.

Since the European carbon emission market was introduced in 2005, the highest quota price the market has seen was 31,00 EUR/t, which was reached on April 19, 2006. Several analysts consider it very likely, that this record will be broken during 2019.