An analysis of the Energy Management Institute (EMI) indicates that revenues from emissions trading from installations (EUA) for Bulgaria in the third quarter of 2020 amounted to EUR 117.6 million. This represents an increase of 0.7% compared to the same period in 2019 and an increase of 23% compared to the second quarter of 2020 according to the European Energy Exchange (EEX). Revenue growth is a result of significantly higher allowance prices, which offsets the smaller amounts of allowances that are auctioned for this period.
On a monthly basis, revenues for Bulgaria from the sale of allowances (EUA) for September 2020 amounting to EUR 48.5 million are the highest since the beginning of the year and are equal to the second best results (October 2018) of operation of the third phase of the EU ETS. The total revenues from issues from the beginning of the year to September 30 amount to EUR 324 million. (BGN 633 million).
In the third quarter of 2020, emission prices ranged between 25.03 and 30 euros per tonne of CO2. In July and September there are auctions, in which average price reaches 30.04 EUR / t CO2 and 29.99 EUR / t, respectively. CO2. These prices represent price records for the third phase of the EU ETS.
Everyone with many years of experience in carbon trading in the EUA market knows one thing: the EU carbon market is always surprising. In a survey by the consulting company REDSHOW advisors, conducted in April 2020, in the midst of quarantine measures in Europe, 42% of respondents said that by the end of the year, as a result of the impact of COVID 19 expect prices between 20-25 euros / t CO2, almost the same percentage (40%) expected prices between 15-20 EUR / t. CO2. Only 8% of respondents have forecast EUA prices between 25 and 30 euros at the end of 2020. No one has indicated an option for the price to be above 30 euros.
On September 24, 2020, carbon pulse announced that Morgan Stanley had raised its EU carbon price forecasts for the next five years by a significant 55% on average following the publication of more ambitious climate plans by the European Commission.
In what direction and how fast prices will change in the next 2-3 years will depend on the influence of various factors – some of them relatively predictable by market participants such as EU ETS reforms in 2021, market interventions of the Market Stability Reserve, Member States’ plans to close coal production and the less predictable market speculation between futures and spot trades.
From July 2020, emission allowances for the Innovation Fund have been traded on the EEX platform, with revenues from their launch until 30 September 2020 amounting to more than half a billion euros. In early July, the European Commission issued its first call for proposals under the Innovation Fund, one of the world’s largest programs to demonstrate innovative low-carbon technologies, funded by auctioning allowances under the EU Emissions Trading Scheme.
Revenues from trading emissions are an important element of the EWRC’s pricing policy
Revenues from emission allowances in Bulgaria are also an important tool for stimulating low-carbon development. 100% (until June 2016 – 77%) of the revenues from the auction sale of all greenhouse gas emission allowances allocated to the Republic of Bulgaria, which are used to reduce the fee Obligation to society, are paid into the Security of the Electricity System Fund. According to the latest price decision of the EWRC from July 1, 2020 (C-20 / 1.07.2020) for the forthcoming regulatory period (1.07.2020 – 30.06.2021) the revenues from emissions trading are expected to be BGN 793,075 000. For the three months of the period already 29% of the target are achieved.
Source: Energy management institute
