Grey Epoch

We are delighted to attend the 2024 Energy Risk Awards Ceremony to pick up our award for Liquidity Provider of the Year. Members of the Grey Epoch Europe Team Emilio Fontana, Victoria Basterra Gil and Beatriz M. picked up our award last night, celebrating with other professionals at the forefront of the energy industry. Read more about Grey Epoch written by Risk.net here: https://lnkd.in/erwkxdbN #celebrate #winners #awards #EnergyRisk #ETS

First up week across the energy complex for a while, with emissions, power and gas markets all up on the week. This in sharp contrast to the prior week, when price action was very much bearish, driven by the Azeri / Ukraine headline. And perhaps that contrast is really the main explanation for the move, simply that last week the market unwound the news of the week before.   Also noteworthy, in UKAs dropped by almost 5% on Thursday on the news that the UK might extend the free allocation period for a year, before recouping some of its losses by end of day. Seems a strange thing for a new government that came to power with apparently stronger environmental credentials than the previous government, but then nothing is surprising these days it seems.   Staying in the UK, today is the day that the last coal fired power station will be turned off for good, making the UK the first G7 member to phase out coal fired generation. Although not directly relevant for short term prices, this is certainly a notable headline and a feather in the UK’s cap. The installation will be converted to biomass, and we can then discuss the sustainability (or not) of burning trees.   Weather wise, last week’s main news was Hurricane Helena. It missed all significant energy installations, but was notable for its ferocity, and in particular for the distance that it continued in land, causing significant damage as far inland as Atlanta and North Carolina. This was because of a particular confluence of weather features rarely seen that allowed the hurricane to remain powerful despite leaving the fuel of the warm ocean waters far behind it. The Atlantic basin is starting to look more active now in general, after a quiet first half of the hurricane season. There are three named storms currently in the Atlantic Basin, and the possibility that another will spin up in the Caribbean. None of the named storms are a threat to land although we might well see their remnants arrive in Europe in the coming days. The potential storm in the Caribbean should be watched for US Gulf landfalls.   European weather could be said to be colder than normal now, into the end of the week, forecast to warm up into next week. The cold spell will prompt demand for heating in the short term. Join our newsletter to receive the full version of the Weekly Market Comments straight to your inbox: https://lnkd.in/gBBbYxZi #Emissions #EUETS #UKETS #Energymarkets #CarbonMarket

In the past month, EUAs prices have seen significant volatility. The Dec24 futures had a spread of €12.36, with a high of €74.75 on August 20th and the low at €62.39 on September 19th. The low was reached after a sudden drop. In 15 minutes the December future dropped almost €3. This drop coincided with a headline from Reuters suggesting that Ukraine had agreed to transit Azeri gas to Europe, a move that would replace remaining Russian volumes. The news initially caused a selloff in the energy market, with TTF (Dutch Natural Gas benchmark contract) dipping towards €32. However, a clarification that no deal had been finalised led to some market recovery. Reach out to Grey Epoch to learn more about the EU ETS #carbonmarket #EUETS #EUAs #emissions

On September 24, 2024, the European Commission published a decision approving the Netherlands' request to unilaterally extend the EU Emissions Trading System (EU ETS) to sectors not currently covered by Directive 2003/87/EC, including buildings, road transport, and other sectors. Monitoring and Reporting (Starting January 2025): The decision mandates that the Netherlands must start monitoring and reporting emissions for the newly included sectors starting in 2025. This gives regulated entities (like fuel suppliers) time to set up systems for tracking emissions and reporting them in line with the EU ETS rules, even before the full extension begins. Full Inclusion in the ETS (Starting 2027): While the monitoring and reporting begin in 2025, the actual trading of emissions allowances (i.e., the full inclusion of these sectors in the emissions trading system) will not start until 2027. This means the new sectors will be added to the EU ETS at that point, and companies will begin trading emissions allowances for those sectors from 2027 onwards. The extension is based on emissions data from 2016-2018, with 5.9 million tCO2 as the baseline for issuing additional allowances. For more details on the sectors covered by this extension, please see the attached Annex. Reach out to Grey Epoch to learn more about the EU ETS.

Main news this week was a Thursday headline in Reuters suggesting that Ukraine had agreed to transit Azeri gas to Europe to replace remaining Russian volumes which most expect to cease flowing at the end of the year. The idea here is that the Azeris buy the Russian gas, and export their own molecules to Europe via Ukraine. Previously Ukraine had blocked such a move, on the grounds that it was actually enabling Russian exports rather than substituting them. As the conventional wisdom had been that remaining gas flows to Europe via Ukraine would cease end 2024, this Azeri switch was not priced in, and therefore the headline precipitated a sell off across the energy complex, with TTF trading down towards 32 Euros at one point, having started the month in the high 30s. Then came the clarification, that rather than a deal having been done, actually the situation is that Ukraine is now “open to a deal” but nothing has been agreed. This does represent a movement from the previous status quo as Ukraine was previously not “open” to the arrangement, but still, the revised news is less bearish than the original headline implied, and consequently markets recovered somewhat.   In other news, European weather forecasts are suggesting another cold snap in the coming days, although things recover again after that, and the longer range forecasts are suggesting if anything a milder than normal winter this year. In the Atlantic basin, a Hurricane is likely from in the Gulf of Mexico, with landfall predicted in Florida on Thursday. At the moment it looks likely to stay firmly to the east of LNG production facilities, but we will keep an eye on it. There are also other potential storms forming in the mid Ocean, early indications are that they would again be fish mixers, staying out in the Ocean while in the tropics, but it’s far too early to say for sure. Join our newsletter to receive the full version of the Weekly Market Comments straight to your inbox: https://lnkd.in/gBBbYxZi #Emissions #EUETS #UKETS #Energymarkets #CarbonMarket

European energy complex lower again last week. Hard to pinpoint an exact reason for prices to slide, perhaps generally that despite cold weather, the market still didn’t manage to get bullish, such that people said to themselves “if the market can’t get tight even when its cold, then maybe things actually aren’t that tight”. There was some will it won’t it with Hurricane Francine in the US Gulf, with a several LNG export terminals powering down, but actually as it turned out supply was unaffected. Join our newsletter to receive the full version of the Weekly Market Comments straight to your inbox: https://lnkd.in/gBBbYxZi #Emissions #EUETS #UKETS #Energymarkets #CarbonMarket

On August 30th, important revisions to the EU Emission Trading System (ETS) were agreed, introducing zero-rating for emissions from renewable and low-carbon fuels like RFNBOs, RCFs, and SLCFs, under strict sustainability criteria. These changes also include improved monitoring and reporting for aviation’s non-CO2 emissions, such as contrails and NOx, which contribute significantly to global warming. Set to be fully operational by January 2025, this marks a crucial step in the EU's push for climate neutrality. Reach out to Grey Epoch to learn more about the EU ETS and how it affects the Aviation sector. https://lnkd.in/eitKq_ai  #EUETS #Sustainability #Aviation #Emissions

The main news from the European energy complex last week was EdF revising up the total estimated electricity generation for 2024 from 315 - 340 TWh to 340 - 360 TWh. This is clearly not a bullish signal, and it added negative sentiment for power prices and also natural gas prices (an alternative to nuclear generation in France being natural gas fired generation). This in turn trickled through to add a bit of weight to emissions markets. The week began on a strong note for Dec24 EUA Futures, hitting the week’s high of €70.99. However, the following days saw a steady decline consistent with other energy markets, resulting in a trading range of €5.04. On Tuesday, Wednesday, and Thursday, the market closed lower than it opened each day. Thursday marked the week's low at €65.95, the lowest level since July 24th. By Friday, there was a modest recovery, with the futures settling at €66.50 - still down €3.80 from the previous week's close. EUA option vols consolidated a bit having hit historical lows a week ago. Weather has been a bit colder than normal, with folks adding back duvets after the summer and contemplating turning on the heating this morning. This cold snap is forecast to persist for a couple of days, returning to normal temperatures next week. The Atlantic basin finally came to life sort of, with storm Francine developing in the US Gulf, and some tropical waves looking like they may develop into storms. The former could be a threat to LNG production on the US Gulf coast, and so we will keep an eye on it over the coming days. The latter look likely to create potentially quite large storms although current indications are that they would curve off into the ocean and “mix fish”, meaning the remnants might well end up in Europe. Some way to go on those however. In wider news, revisions to the EU Emission Trading System (ETS) were agreed upon, for introduction from January 2025, introducing zero-rating of emissions from renewable fuels of non-biological origin (RFNBOs), recycled carbon fuels (RCFs), and synthetic low-carbon fuels (SLCFs), provided they meet specific criteria under the Renewable Energy Directive (RED II). Key changes include avoiding double-counting emissions and improving rules on CO2 transfer and monitoring. The revisions also focus on zero-rating biomass fuels, stricter monitoring for aviation emissions, and reporting non-CO2 impacts, such as contrails and NOx, which make up a large part of aviation's climate impact. The EU aims to enhance scientific understanding and mitigate these non-CO2 effects through financial support and monitoring systems, which will be implemented by January 2025. (Source: European Union) Join our newsletter to receive the full version of the Weekly Market Comments straight to your inbox: https://lnkd.in/gBBbYxZi #Emissions #EUETS #UKETS #Energymarkets #CarbonMarket

A quiet holiday week, with European natural gas prices initially down on ample production and hopes for resolutions of geopolitical issues, but then back up again on other geopolitical issues. A “new" geopolitical theme was the (re)emergence of Libya as a headline maker. As in the past, the Libyan factions have used energy as a political football, this time in a disagreement over who would run the central bank, which resulted in the curtailment of oil and gas production. The reduction in production means less revenue which focuses everyone’s minds towards finding a speedy solution.   The Atlantic Basin remains eerily quiet in what should be the peak of the hurricane season. We did see storms in the UK and Europe, partly from remnants of hurricane Ernesto and partly from a more local effort, named Lillian in the UK. These drove offshore wind production and lower prices in delivery in wind heavy markets. Going forward there are a couple of tropical waives making their way across the ocean which have the potential to develop, with the European model suggesting there could be a powerful hurricane in the Gulf of Mexico in about week, which we will keep an eye on regarding LNG production. Join our newsletter to receive the full version of the Weekly Market Comments straight to your inbox: https://lnkd.in/gBBbYxZi #Emissions #EUETS #UKETS #Energymarkets #CarbonMarket

Emilio Fontana, our Head of Business Development, will be representing Grey Epoch at the SMM Hamburg (Shipbuilding, Machinery, and Marine Technology) trade fair in Hamburg this Wednesday and Thursday, September 4th-5th. As leaders in emissions trading, Grey Epoch is committed to supporting the maritime industry through innovative EUA solutions. If you’re attending SMM, don’t miss the chance to meet with Emilio and explore how Grey Epoch can help your business. Reach out to schedule a meeting! https://lnkd.in/dr5GCD9 #SMM2024 #MaritimeIndustry #Sustainability #EmissionsTrading #EUETS