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the Homing Bird #1

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EUA prices did not fluctuate much in October. The main factors affecting the energy and EUA markets were gas-related strikes in Australia as well as a leak on a pipeline in Finland.

the Homing Bird #1
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The Homing Bird

October 2023

Compliance carbon markets made easy by Homaio.

The Learning Journey, Part 1. The EU ETS Fundamentals.

Carbon markets are a big deal. They cover 20% of global emissions. They also have a significant impact on our climate, our economy, and our society.

Yet carbon allowances don’t often make it to the diner table conversation. 

We designed a Learning Journey to answer all the questions you never asked about carbon markets. In simple terms and without background knowledge, discover the building blocks of our greatest tool to fight climate change. 

Every section will offer several episodes. This is the second episode. It is suggested to go through them in the proposed order, as new topics are introduced progressively. 

- What is Carbon Pricing? 
- Cap and Trade systems
- The EU Cap and Trade 
- Sectors under the EU ETS
- The Cap 
- Price evolution over time

 Go further and expand your knowledge through Homaio’s periodically published articles. You do not need to be an expert on the topic - this blog simply offers the opportunity to strengthen your understanding.  

How have prices evolved in the past year?

Understand what where the driver's for the sideways trading this year, and what the perspectives are for the year ahead.

European Carbon Allowances as a Policy tool

Discover the history behind the current emissions trading scheme and how it evolved over time.

Price drivers this month

This month EUA prices oscillated between €82.04 and €84.8, reaching their lowest point at €78.95. Last year, bans on Russian gas supply to Europe were introduced. As the Union had to get imports from elsewhere, it is now more affected by what is happening in the worldwide power sector. Several energy markets disruptions were bringing global commodities prices higher in the past few weeks. In turn, those were introducing upward forces to European carbon markets as well. 

Liquified Natural Gas (LNG) facilities in Australia announced that they would go on a strike. This matters because they produce around 10% of global supply. Europe is currently a big buyer of Chevron’s LNG and is in direct competition with Asian actors for those resources. Chevron’s strikes decrease supply, which would in turn drive prices up.

An offshore gas pipeline in Finland was shut because of a detected leak. The facility is expected to stay off until April 2024. News that the leakage was a result of an act of sabotage brought more concerns to investors. The identify human activity suggest that other interventions are also possible. This could decrease supply even more. Therefore, it pushed the gas prices to increase further. 

The current geopolitical conflict in Israel also adds to the upward move to energy prices. Israel has a lot of natural gas resources and is a supplier to the Eastern Mediterranean regions and Europe more broadly. After the attack began, Israel shut down a big offshore production platform. The country asked Chevron to stop the production in a field accounting for about 50% of the country’s gas, also being a big supply plant for Egypt and Jordan. To compensate for it, Israel will import from other countries, hence entering in competition with European demand as well. Hence, the reduced Israeli supply pushed up global (and especially European) gas prices. 

However, other factors introduced downward dynamics for EUAs. They limited the higher energy prices’ effects described above. Demand for EUAs was generally low. 

Industrial activity has been low in the recent past, as it has still not recovered after the shock introduced at the start of the Russia-Ukraine war. The decreased productivity requires the emission of less CO2. There is less of a need for carbon allowances, logically. 

There has also been an increased use of low carbon intensive energy resources (solar, nuclear and hydrogen power), also limiting CO2 emissions. Uncertainties about the incoming winter also limited some investors from entering a big buying wave. They were waiting for more clarity on the weather conditions and the corresponding energy needs for the next months.  

What’s new with Homaio

We are live! The first individuals to invest in carbon are being onboarded. They will be the ones to unlock EUAs. We’ll be onboarding new investors progressively in batches - reach out!

We have improved our website. It now centralizes the most important updates on carbon markets and on our activity. And it does so in a more intelligible and effective way. 

We are setting up our research strategy, and building the Homaio knowledge base. We are unlocking carbon markets. But this implies popularizing their understanding. Learn, digest, and spread the word. 

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