Among all commodities, carbon has taken centre stage this month. May ‘21 will go down in history because EUA price hit the level of €50/tCO2, which is a milestone for the whole energy market whose full repercussions have yet to be felt.
Carbon price rally is just gaining momentum, and, in that context, the room for manoeuvre for Western European coal power plants is extremely limited.
One can hardly overestimate the importance of rising carbon allowances, with the indicative front-month baseload spread for a medium-efficiency NWE gas-fired plant being €0.7/MWh between 1 Apr and 7 May ’21 while that for a 40pc coal unit stood at minus €5.5/MWh.
Coal still plays a significant role in Western Europe’s energy mix, most notably in Germany, as a great part of lignite and hard coal production was hedged in previous years. Meanwhile, each new record set for EUA price recalls that the future of coal in the region is predetermined, just as it was practically inevitable that Pep Guardiola’s team would return to the UEFA Champions League final. But if it took the Catalan boss 10 years to reach that stage again, coal may become a thing of the past more quickly in Western Europe.
Source: Yakov Grabar
See original post by Yakov at LinkedIn.