Carbon prices 'to stay volatile' this week

Carbon prices are expected to remain volatile this week until further clarity is given from government coalition talks in Germany. That’s according to the weekly market report from npower, which […]

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By Priyanka Shrestha

Carbon prices are expected to remain volatile this week until further clarity is given from government coalition talks in Germany.

That’s according to the weekly market report from npower, which also suggested the carbon market is eyeing the impact those discussions could have on the EU’s ‘backloading’ move.

Backloading would involve temporarily delaying the sale of 900 million carbon permits in the EU Emissions Trading Scheme (ETS) to help lift carbon prices. The EU Parliament and the council of member states need to agree on the proposal before it can become law.

There was plenty of wind generation last week, supplying 10% of the generation mix and with imports via the interconnectors, peak power margins were “healthy” throughout the week, according to Ben Spry, Client Portfolio Manager at npower.

The UK gas system was “tight” for the majority of last week however Mr Spry suggested storage is expected to be “nearly at full capacity” this week due to forecasts showing a “healthy LNG outlook”. Brent oil was strong at the start of last week but lost $3/bbl (£1.86) on Friday.

Looking ahead, Mr Spry added: “Keep an eye on the key data releases from the US, certainly in terms of employment and GDP towards the end of the week as this could have repercussions on the US Federal Reserve’s monetary policy.”

He said volatile carbon and oil prices “should continue to set the tone for the season”.