EU considers more transparent carbon market reporting – draft

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A coal-fired power station scheduled for closure is seen from a cemetery in As Pontes, Spain, February 8, 2022. Picture taken February 8, 2022. Picture taken with a drone. REUTERS/Miguel Vidal/File Photo

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BRUSSELS, Feb 18 (Reuters) – The European Union plans to release more information about trading in its carbon market, according to a draft document, as some governments call for limiting the participation of financial speculators in the scheme.

Tougher EU climate targets and high gas prices that have caused some power generators to switch to higher-emitting coal have helped drive up carbon prices in recent months. Permits in the EU carbon market hit a record high of €98.49 a tonne this month, after rising around 150% in 2021.

As prices soared, countries like Poland have stepped up calls for the EU to restrict the participation of financial speculators in the market. The European Parliament’s lead legislator on the scheme’s upcoming reforms this week proposed rules to make participant behavior more transparent.

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The European Commission appears ready to address these concerns, in a communication to be published on March 2.

“The Commission will explore ways to ensure more detailed public information on the different types of derivatives. In particular, better visibility and scrutiny of the options contract market could lead to a better understanding of the overall market dynamics” , a communication project mentioned.

The European carbon market obliges factories, electricity producers and certain airlines to buy permits to cover their emissions. The number of permits issued to the market is gradually decreasing each year, to ensure that emissions also decrease.

Derivative contracts account for most carbon trading in the EU. European securities regulator ESMA publishes weekly reports based on data including participants’ positions in carbon derivatives, and released a preliminary investigation in November saying there was no evidence of manipulation. on the market. Its final report is due next month.

“Based on ESMA’s final report, the Commission will assess in 2022 whether certain trading behaviors would require further regulatory measures,” according to the draft, which could change before publication.

The paper says high CO2 prices were not behind the recent spike in electricity prices in Europe, which was mainly driven by rising natural gas costs.

“The effect of rising gas prices on electricity prices is about eight times larger than the effect of the carbon price,” he said.

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Reporting by Kate Abnett; Editing by Kirsten Donovan

Our standards: The Thomson Reuters Trust Principles.

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