Platts: "EU carbon prices hold above Eur28/mt, but supply hike looms"

We usually post just one of the five charts with the link to the rest but this week there are two that are somewhat related.
From S&P Global Platts:

Commodity Tracker: 5 charts to watch this week 

2. German gas-fired generation margins fall as fuel costs rally

What’s happening? German gas-fired generation margins have fallen from record highs in July, moving below comparable coal-fired margins for 2021, S&P Global Platts data show. Behind the latest swing is a sharp rebound in fuel costs: front-month gas on the benchmark Dutch TTF hub has tripled from lows in May. EU CO2 prices dipped in August, but remain high enough to keep less efficient coal units offline for now. Power prices, meanwhile, continue to strengthen amid gradual demand recovery, supported by record-low nuclear generation in Germany and  France.

What’s next? Germany’s first coal plant closure compensation auction for 4 GW of hard coal capacity ended September 1. Units awarded compensation are to close by end-2020. Newer, more efficient coal plants with 45% efficiency, however, are likely to return gradually from Q4 as clean dark spreads edge above clean spark spreads. While 2020 coal generation is set for a new record low, German gas-fired output is on track for significant on-year gains with the long-term trend of improved gas margins remaining intact. This has prompted RWE and Uniper to return mothballed gas plants to service from October 1.

5. EU carbon prices hold above Eur28/mt, but supply hike looms

What’s happening? EU carbon dioxide allowance prices held up at above Eur28.00/mt in early September, amid stronger natural gas prices and as well as longer-term bullish elements linked to tighter carbon allowance supplies in the fourth trading phase which starts in January 2021. Adding to this, the European Commission is expected to announce a revamped EU 2030 emissions reduction target – likely in late September – which is very likely to play into a steeper fall in the annual carbon caps later in the decade to 2030, tightening the supply of allowances.

What’s next? However, recent carbon price strength may be tested as September progresses, with monthly auction volumes set to rebound to over 86 million mt, compared with just 37.5 million mt in August. This will become apparent this week, as auction volumes fully rebound after some holidays in late August and early September which reduced weekly volumes. Auctions volumes are set to jump to 20.8 million mt in the week starting Sept. 7, compared with just 11.8 million mt in the week starting Aug. 31, which may work to counteract some of the recent bullish sentiment....

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HT: ZH