Why is the GHG premium decreasing?

The GHG market has been experiencing a negative trend since 2023. The GHG premium has fallen from €430 in the first calendar week of 2023 to €110 in the ninth calendar week of 2024. But how can this be if the purpose of the GHG premium is to reduce CO2 emissions? 

Unfortunate electricity mix 

The so-called energy generation reference value, which is itself based on the electricity mix, is used to calculate the GHG premium. The less renewable energy is used in the electricity mix in a year, the higher the energy generation reference value and the less CO2 can be saved and the lower the GHG premium can be. The electricity mix from the year before last is used to determine the energy generation reference value. The electricity mix from the 2022 quota year was therefore considered for 2024. In 2022, the Russian war of aggression in Ukraine caused significant cuts in the European energy supply. Russian gas supplies were restricted, which resulted in coal-fired power plants being switched on again. This produced more emissions and worsened the electricity mix in 2022. The GHG market is now experiencing the effects this year. 

Suspected misdeclared biofuel 

The purchase of imported fuels is particularly cost-effective for mineral oil companies, especially imported biofuels from Asia. Imports have increased since December 2022, reducing the demand for GHG certificates. Nevertheless, there are doubts about the environmental friendliness of biofuels imported from China in particular, as some suspect that they are nowhere near as sustainable as they have been certified. 

Rapid target achievement by the oil companies 

The steadily growing interest in e-vehicles and the increased number of registrations have created a surplus supply of GHG certificates. This means that the obligated mineral oil companies quickly reach their targets and demand falls. With an excess supply, the price also falls and, as a result, the level of the GHG premium. 

All these factors led to the reduction in the GHG premium. However, we are only in the third year of the GHG premium and there is plenty of room for adjustment and growth.