Physical Carbon Monthly Report | April

20 April 2022

Physical Carbon ETC Monthly Report: Key Takeaways

In March, the European Carbon Price (EUAs) was on a rollercoaster: While the price ended the month almost unchanged to end of February, it dipped below €60/tonne for a day- price levels last seen in August 2021. [1]

The invasion of Russian armed forces to Ukraine on 24 Feb caused a significant sell-off in the EUA market. High spot trading volumes immediately after the invasion suggest that polluters required to comply with the EU ETS sold EUAs to raise cash, e.g. to service margin calls for other energy markets. As prices dropped, more and more stoplosses were triggered, both with compliance companies and investors in the market, leading to a sharp price drop. [2]  

On 2nd March, the EUA auction did not clear (volumes are sold a few days later), and while prices kept dropping for a few more days, the following auctions were heavily oversubscribed by up to 3 times the auctioned volume. [3] This strong demand was also mirrored in the secondary markets, and prices rebounded above €75/tonne by 10th March, and settled above €80/tonne by 22nd March. [4] For the rest of the month, prices traded rangebound between €75- 80/tonne according to Intercontinental Exchange. [5]


EUA Market Outlook

On 1st April, the preliminary emissions data for 2021 was published, suggesting emissions increased 9% in 2021 compared to 2020. Companies covered by the EU ETS have now until the end of April to surrender their carbon allowances. [6] Historically, this resulted in healthy last minute buying, making April one of the months with the highest returns - however past performance is not Indicative of future results.

In addition, the geopolitical developments (an import ban of Russian fossil fuels, discussions around the EU Carbon Border Tax), basic fundamentals such as GDP growth and weather as well as the political progress around the EU ETS reform may drive markets. [7]


Events to watch

  • 5 Apr - EU Parliament to vote on MSR reform. Likely no significant market impact as proposal suggests to keep current MSR framework unchanged [8]
  • 30 April - final compliance deadline. All polluters covered by the EU ETS must surrender enough EUAs to cover its 2021 emissions by 30th April, otherwise they face a penalty (of around €100/EUA missing), and - crucially - must still surrender the missing EUAs [9]


 Physical Carbon ETC Performance (As of 31.03.2022)







SparkChange Physical Carbon EUA ETC







EEX EU Spot (Phase 4)







Performance before inception is based on back tested data. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 31/03/22. Please note that all performance figures are showing net data.


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