Dutch power Cal’ 20 makes strong gains on carbon floor plan

Source: Heren


The Dutch power Cal’ 20 Baseload contract gained more than €3.00/MWh from Tuesday to Thursday after plans were announced by the new coalition government to introduce a carbon price floor from 2020.

A Dutch coalition agreement was finally reached on Tuesday, 208 days after the election on 15 March (click here to read story).

As part of the agreement, the coalition announced plans to introduce a national CO2 minimum price for the power sector, likely from 2020. This will be the EUA price plus an add-on tax, similar to the UK price floor model.

According to ICIS carbon analysts, applying our emission estimates of 40.1 million tonnes in 2020 and 39.3 million tonnes by 2021, we can calculate an expected top-up tax of €5.50/tonne in 2020 and €7.10/tonne in 2021.

However, the information provided by the government plan does not enable a quantification of the applied overall CO2 minimum price given that we don’t have an indication of the interim CO2 price expectations of the incoming Dutch government.

According to trade data reported to ICIS, the Cal’ 20 Baseload power contract jumped from a last trade on Tuesday of €34.60/MWh to a final deal on Thursday of €37.65/MWh.

As a result of this rise, the contract is now trading at a premium to the Cal’ 19 contract.

The news will provide a boost to neighbouring countries as a unilateral increase in Dutch prices will drive higher exports to the Netherlands.

The country is planning to install an additional 2.5GW of interconnector capacity by 2019, with a new 1.5GW line to Germany by 2018, a 300MW expansion with Germany by 2019, and a 700MW interconnector to Denmark, also by 2019.

The Netherlands already has a 1GW interconnector with Britain, a 700MW interconnector with Norway, as well as several smaller connections with Belgium. matthew.jones@icis.com