Keeping out the CO2 speculators

European carbon prices have been sidelined by the debate around sanctions on gas, coal, and oil from Russia. However, EUA prices have seen huge volatility, with price swings of up to EUR 8 a day. Listen to a discussion on the price drivers over the short and medium-term,  and why EUR 100/t would be unsustainable. In addition, what is the likelihood of excluding financial entities, or speculators from the market?

Host: Richard Sverrisson, Editor-in-Chief, Montel 

Ingvild Sørhus, Lead EU Carbon Analyst, Refinitiv
Marcus Ferdinand, Head of Analysis, Greenfact
Bernadett Papp, Head of Research and Analysis, Vertis

Transcript

Richard Sverrisson, Editor-in-Chief, Montel: 0:05

Hello listeners and welcome to the Montel Podcast. Bring Energy Matters in an informal setting. Today's pod takes a slightly different format. During Montel's Green Week, I hosted a wormed session on carbon, and we decided to put this out also in the podcast format. I hope you'll find the views expressed by the panelists. Interesting and illuminating. Enjoy the longer, the normal episode. So it's my great pleasure to welcome three of the leading experts in the field to the panel today. So warm, welcome to Ingvild of Refinitiv.

Ingvild Sørhus, Lead EU Carbon Analyst, Refinitiv: 0:41

Hi here, Richard, and thanks for having me on this green Week.

Richard Sverrisson, Editor-in-Chief, Montel: 0:45

Always a pleasure, Ingvild. And then we have Marcus Ferdinand of GreenFact and Bernadett Papp of Vertis. A warm welcome to you all. I think I'd like to start by looking at recent announcements or policy proposals from the Environment Committee, also known as Envy in the European Parliament. Marcus, if I start with you, it, it's clear that meps in the Environment Committee, they want greater ambition, they want tighter targets. What do you make of this target of 65% cut in emissions compared to 1990 levels? Is it realistic?

Marcus Ferdinand, Head of Analysis, Greenfact: 1:19

I think, before we start about talk, talking about like 67%, I think an important point to make here is that kind envy it seems that there is still two kinds of amendment, right? From DP who is steering this file through the parliament is I think still leaning towards 61% reduction, which is in line with the commission proposal. There is lots of differences in terms of how how to get there and in terms of how the actual details should look like. But I think this is. This is still the URS position. And then there has been a coalition formed by more progressive political groups including the s and d Renewed Greens and the left who actually pushed for the 67%, which I think yeah, in a way is not too surprising. Looking into where these political groups come from and how they have argued in the past. So all of this is still up for debate. There's gonna be a vote scheduled for Tuesday next week 17th of May, which happens to be a holiday in Norway. So I think we're still probably ahead in front of our screens there. But but that vote is gonna be relatively tight I would say in terms of the ambition levels, in terms of which of the alliance is actually is gonna get its views through. It's by means the final position, right? So in the end, this envy. So the environment committee's position is then gonna be voted again in the entire parliament's plenary. Which is where you have slightly different let's say streams of thought probably who you'll still try and amend the version that has been discussed so far. And this is scheduled for June. This is an important step next week and it'll probably also. Reaction. But there is some way to go before this then becomes the final Parliament position. I think we can dive a little bit more into the details allowing and also kind of some thoughts on what they think about this.

Richard Sverrisson, Editor-in-Chief, Montel: 3:12

Absolutely. So what are your thoughts Ingvild on this envy position is it likely to pass? Will a member states agree on such a tight target?

Ingvild Sørhus, Lead EU Carbon Analyst, Refinitiv: 3:20

I think as Marcus say, it's it's one an important step, but it's far from the final step. It's we've seen previously in the, for instance, the phase four reform, that things were changing quite, quite a lot from memory to to the part plenary session. So I think but it's quite interesting that you have the support for 67% because that's quite more ambitious and you really going to the the Parliament had a, initially a stronger 2030 target. I wanted to see higher ambition for 2030 initially, before you manage to agree on at least 55% target in the end. So this seems to be the backdoor to to be able to do the, at least 55% for the whole climate ambition. But again, also you have bit, the whole fit for 55 package is. It's this puzzle that you need to fit all the pieces together. And of course, you're talking about the ETS two there has been quite a lot of assistance towards kind of the ETS for transport and buildings. And of course, if you loosen the the ambition. That might be the result if you go step away from et s for buildings and transport, but you get less climate reductions from these sectors and that needs to be, and then compensated in some other sectors. And of course then you're looking at ets to take more of the burden that is then weakened on the other on the other and, but I think it's. We have high prices now for ETS or the existing et TS. So of course, it's not going to be a easy ride to get a higher ambition, I think both for for in the plenary and not, at least for the council. For the member states that might be tricky to get agree on a higher ambition. So it depends a bit I think it depends a bit on the whole package. If you are loosening some other ends, you need to compensate that in some other areas of the whole high proposal. So yeah, so it's going to be very interesting to see and, I think it's quite interesting what we see Ha has come out now and as Mark say, it's two, two versions that's been circulated now. One with for instance lysis document where you see no rebasing, but it's deeper linear reduction factor. And then on the other hand, quite the. Steep, linear, or steep or large rebasing and then less steep linear reduction factor, which is quite, they're quite diverging quite a lot from the commission proposal. Both these these two two elements I would say.

Richard Sverrisson, Editor-in-Chief, Montel: 5:50

Bernadett, let me get one, let me get your views here, because there's a lot happening in Brussels and across Europe, governments are trying to cut their dependency on Russian gas, but at the same time, they don't wanna see energy prices increase even further. So what are your views on what's happening in Brussels at the European Parliament level?

Bernadett Papp, Head of Research and Analysis, Vertis: 6:11

Yeah. I would like to connect to both what Marcus and Ingrid said, but also bring in a slightly different perspective because Marcus studied very well that. These negotiations seem to be still at the very initial phase. So we have different versions different proposals on the table, and these have to pass. Several other rounds of votes. So what we have seen yesterday is just an agreement within a small group of the European Parliament, but they have to vote next week. Then the European Parliament plenary votes in June and then. The core legislation process can start with the member states and also with the approval of the European Commission. The final form of the reforms might look quite different from what we have seen, for example, yesterday. What is Sure, and what, for example, our clients can also see is just individual headlines. Are already increasing the price volatility in the carbon market. And I think this is something that we have to live with also in the upcoming months. So this is something I think that we have to emphasize here. On the other hand, from the compliance entities perspective, I think that it is. Despite the proposal of a higher ambition, that I think was really not a big surprise as Ingrid also mentioned, because the European Parliament was always in favor of a higher ambition. But I think what is comforting for the companies in Europe that they see a continuity in the legislation, they see that the European Union did not give up on the green ambition despite the very challenging. Circumstances, as you also mentioned, Richard, are with high gas prices, electricity prices, issues with supply chains, getting raw materials, et cetera, et cetera. This legal certainty gives some kind of, hope also to the company is that they might also get the support either in the form that the reforms respect their challenges they face currently. Or they receive other kind of re of support. Like I'm thinking of financial support to modernize or to decarbonize their businesses because governments and policy makers recognize their current situation. What I can report you from our client side, interestingly. They are not keeping an eye on the big picture how the cap would be modified, what the linear reduction factor would look like on the 2030. But they are focusing on, let's say, some smaller points of of the amendment that affect their business. For example the free location and the plans to phase out the free location for industrials. This is something that they they feel as important because it as an in it is an indirect subsidy, let's confess for industrials that have difficulties right now in their businesses. Also CBM is a focus that is also related to the to the free location. Plus there are sectors like, for example, the ceramic sectors in Portus, Spain and Italy that see an opportunity in the CBM to receive protection from from foreign competitors. So these are quite interesting. Of course, I also have to say that they keep an eye on each amendment related to the speculative activities. And last but not least, we are also contacted by many shipping companies from the maritime sector. That are interested in how how the new rules would affect their business. So we have a different perspective. I would say a quite a practical one. But we also keep a close eye on the development.

Richard Sverrisson, Editor-in-Chief, Montel: 10:05

I'm sure that we will touch on some of those issues late in the discussion. But if I could turn to you. To you as analysts and ask you about your price forecasts. Now I can understand it. It's quite a difficult, business to be in at this, in this highly complex and ever changing world. But what Marcus, do you think are the key drivers that you think that market participants should keep an eye on in the coming weeks and months?

Marcus Ferdinand, Head of Analysis, Greenfact: 10:30

Yeah, I think we have started to discuss probably one of the most important ones already, which is the policy process, right? And I think one. Just to add on what we said before on, on this one, I think one element that we didn't touch up on yet is the proposal on the msr, which I think is crucial as well to understand like how the market is going forward. So maybe lemme spend very quickly on, on that one before I move to the price driver. So I think the r proposal is a very interesting one because it deviates obviously quite a bit from the from the commission proposal, which in a way forough kind of the threshold to remain 33 and 4 million tons. Adding like a buffer level, right? Upper buffer level. So the compromise amendments, so both versions actually seem to, in envy, seem to wanna lower the thresholds to where the upper level would actually be reduced to 700 million, which obviously is huge consequence in terms of how the MSR is gonna operate. And then there is a plan as well. Manifest in the proposal. It's gonna be voted on next week to actually reduce the the upper level in line with yeah, in relation to the, to me it's still unclear on how this exactly will look like, because I think the wording there is not percent clear, but it would result in the upper, which would. Let's say more of a kind of a mechanism sitting in the background as it was planned by the commission proposal to kind a more active market stability element. Again, I think that's quite crucial to understand. I talking about all the details as well, obviously but this is gonna be yeah, very important for the market to to watch. All of which, something. Quite some difficulties in terms of understanding what what all of these twists and turns are these days. So that's why watching the key lines, key developments, I think is super important when it comes to to other drivers. As I said, we talked about the policy part and we can probably pick up on that. Geopolitical situation. There's no doubt that everyone is talking about it. So it'ss probably boring for this this setup even though we yeah we obviously have to acknowledge all the cruel things going out going on in Ukraine at the moment. This has some implications for the huge implications. Prices. Situation to prevail. We have a relatively, like in combination with that, with relatively low hydro reservoir levels, which make it a bit difficult in a way to react from that perspective. And the prospects for filling these reservoirs as well as the gas storage levels are. Rather gloomy. So I think for this year, we're gonna, we have to accept the fact that this market is gonna be in a very high price environment. We'll see emission rise compared to what we've seen last year. Again, because we have more fossil demand, a lot of. Let's a decisions on the policy side in terms of securing more gas supplies, more NG supplies coming to Europe and at the same time seeing industrials facing yeah, a relatively difficult situation in terms of securing the gas in a situation. The situation or economic situation for these players is deteriorating, right? In way is a lot of different at play and it's listeners to podcast or this webinar, but this is like where carbon has place itself. So in way politicians doubling down on the carbon agenda or the low carbon agenda, say on the renewable agenda probably. But at the same time this will take some time to, to yeah, in a way. Bear fruit. In the meantime we have a short to midterm situation where there is a lot of chaos in the markets. And carbon is in the middle of that.

Richard Sverrisson, Editor-in-Chief, Montel: 14:25

Yeah. So if I'd like to continue in that vein and ask you Ingvild about the flight from Russian gas or Europe weaning itself off the imports of Russian gas now, what does that mean for carbon markets?

Ingvild Sørhus, Lead EU Carbon Analyst, Refinitiv: 14:38

Yeah. If I can start on the short term first. I think we have seen it quite change in dynamics because. As we don't have sufficient gas in the market with kind of, it started already when Russia was sending less gas to Europe last year that we didn't have this. In the carbon market normally you can do this immediate emission reductions, which is switching from coal to gas like the fuel switching component of of the or as acid dy dynamics of the carbon market. But kind of in leading up to the end of last year we didn't see much fuel switching taking place just because there was not sufficient gas to cater for additional demand in the power sector. We had record high carbon prices, but still that wasn't sufficient to trigger these short term emission reductions that we textbook example that we will switch from coal to gas. And also with invasion of of Ukraine. Then we see then we see that kind of the curve for the gas price have just increased. And by that we have really seen that carbon has lost the anchor of or the anchor in the fuel switching complex. Previously we were using more kind of front months then when it couldn't compete with the gas prices or the rising gas prices, we were moving to the to, to the year ahead to find kind of the price anchor. But now we see we probably see tight gas year this year and then also next year. So it's really kind of carbon is, has lost that fuel switching anchor that we have seen previously that is at least taking some direction from that. So that's in the short term and we don't necessarily foresee that will come back anytime soon. So it's really, carbon is in a bit of a search for what is the new price setting mechanism for carbon. And then of course, then you're looking at more, long term and kind of the the abatement costs. From the industry sector like green hydrogen, CCS, that's being more relevant also for the price. Price. Now, what is the fair price for Carbon at the moment? But then again of course we will see these years that we'll have more emissions necessarily from the Colburn or higher Colburn mean we are facing less or less or delay in coal phase out plants. And we've also seen an extreme kind of situation with French nuclear and as Mark Marcus mentioned, the hydro situation. But we're also seeing a push for, from countries and from the European Commission to speed up the the renewable fa renewable build out. And of course, yes, in the short term we are looking at more coal burn, more fossil fuels, more CO2 burned in in Europe. But hopefully, everyone sees the urgency to move at a much faster pace towards renewables and a faster inclusion of renewables. So in that sense, to 2030, we will probably see a more speedier pace out. Or at least that's the goal. Now that you. The green deal with, for instance, increased renewable assumptions, probably we'll see. Even higher renewable target proposed by the commission. Possibly also part of the repower plan. That's it's that's the signals that you see is we want to go. Or to secure the energy of supply. That's the way to go for Europe. And even without the war in Ukraine and and sanctions on Russian coal gas, a higher international competition also for coal gas. So it's really for Europe to be to secure supply. I think that's everyone sees that as an important factor.

Richard Sverrisson, Editor-in-Chief, Montel: 18:07

Absolutely. You've painted a very complex picture and you know why it's it's very hard to, to what, to, to forecast what all these factors mean for prices. I'd like to ask you, Bernadett, what are your expectations for the coming weeks and months? Are we gonna, are we gonna fall back to 55 or are we gonna go above a hundred? What are your views here?

Bernadett Papp, Head of Research and Analysis, Vertis: 18:28

Honestly of course there is a certain probability for both scenarios. In a extreme case we might see the price dropping again, although 55 is quite far away. And I don't think that it would be in line with the general ambition of the policymakers and also. As GUI mentioned the general assumption is that this year and maybe even in the next year we didn't see higher emissions from the power sector simply because this is the way we can secure the energy supply both for the industry and four households in Europe. We have seen that already last year after, after. Verified emissions report came out in April. And we have seen there is just one thing that comes to my mind that not only an increased use of coal, but also increased use of oil. That was quite surprising and I had a feeling when I first read the news that we were getting back couple of years in history. But unfortunately these are the resources we have access to right now. Of course keeping in mind the ambition to reduce emissions by 2030 and also to reach the climate neutrality by 2050. Higher prices will be needed. And we have seen actually in the middle of the war that the price already approached the historical maximum be reached before the start of invasion of Ukraine. So I think that if market participants see the way forward and this is why I emphasize also in my previous intervention that this political certainty is crucial also for. Setting the price part in this market. I think that, we can easily approach again the historical maximum and we might see new records in this market, especially. As you also mentioned, the volatility is huge. Yesterday we had an intraday volatility of more than eight euros. I think that this opens the possibilities or increases the probability of new records rather than the new laws in this market.

Richard Sverrisson, Editor-in-Chief, Montel: 20:39

New records in the coming weeks, or when do you think we'll see these new record highs?

Bernadett Papp, Head of Research and Analysis, Vertis: 20:44

Absolutely. As the negotiations go on on several platforms. So what among member states and in the European Parliament on the summer break I think that this can lift the prices definitely to new records in the upcoming week.

Richard Sverrisson, Editor-in-Chief, Montel: 21:00

What's your view, Marcus? Do you think, are we more likely to see a hundred than 55?

Marcus Ferdinand, Head of Analysis, Greenfact: 21:04

I think it's impossible to answer a question like this as black and white. So there is no like simple answer, right? As you already mentioned, it's a very complex picture. And I would say a lot depends on kind of factors outside the carbon market, right? So modeling the carbon market at the moment means you need to model in a way. Kind of geopolitical situation, market situation plus the rest of the world in terms of energy demand, right? Which is something that is inherently complex. I think what we see, and that's what alluded to is that the volatility, having a price move of eight to 10 euro in a day can send the price anywhere, right? So I moment. Just continues to be a bit detached from the fundamental situation. So there is a lot of sentiment trading going on. When we come back to fundamentals, what's the problem at hand at the moment? The problem at hand is that the way we need to see how the U is able to basically detach from Russian gas imports. So we'll see some of that being replaced by lg. But and probably Norwegian, Northern African type gas. Some demand side measures and substitutions probably with increased coal imports. But in the end it comes down to having a very tight balance on the gas side. There is no doubt about this. And I think this is gonna be one of the more certain elements in this, I would say. So what we see is that the EU currently finds itself really between a rock and a hard place, right? So it's, it needs to get rid of Russian gas. Not causing an even more bullish spiral for the water energy complex. And this is a very complex one to solve. So all of the plans that we're seeing at the moment on the renewable side to speed up these processes go green everywhere. This is a process that, that should have started a decade ago probably in order to bear fruits now. So this will take time. I would say that mean so we entering period where I. There was quite, quite a big negative correlation going on, which was more fear that will lead to industrial demand destruction, and, but I think we're seeing this easing at the moment. So the correlation to gas prices getting more into positive territory again, which, which could potentially mean that it's moret on the fuels. Which element went the one that point out like. Non-existence of fuels, which opportunities anymore, which would then be a bit more of a bullish scenario. I would say. This is in, I would say de determining the short midterm in the long term. It's more mixed. So this is where we see an increase in the renewable targets, ramp up plants in, in new member states. But guess how much compensation, right? So including hydrogen, including on. And I think this is where it's getting bigger again with the taxonomy discussion. So here, politics play a role again. So what do we define as green? How much renewables do you need actually in order to prove that you're reaching your targets? So all of this will, will then kind of de determine how carbon prices will evolve in the mid to long term bull. Dip to be honest. I think we have seen that levels around 50 to 60 euro seem to be quite attractive from a compliance operator perspective to buy. But that all depends on yeah, in a way, on opportunistic buying. And then I guess the upside at the moment is slightly below Euro with the high but fragile. That would be my. Kind of view of the I think the moment it's, yeah, a of short, a situation, right? And the proposal commission could potentially provide a bit more light in combination on kind of future developments in combination with what we see coming outta envy. So like this, these pieces of puzzle need to fall into place. On the policy side, on the EU policy side this is the area where the EU can actually actively determine the next steps while still being very dependent happens outside.

Richard Sverrisson, Editor-in-Chief, Montel: 25:19

Marcus, will we see a hundred euros or will we see the a hundred euro level breached in the coming weeks?

Marcus Ferdinand, Head of Analysis, Greenfact: 25:26

I think we'll see the hundred euros in the uts not too long from now. I would not say this is gonna be a sustainable level.

Richard Sverrisson, Editor-in-Chief, Montel: 25:32

And Ingvild, if I can turn to you what's Refinitivs view on where prices are gonna go in, in the coming weeks? It's clearly a very highly complex and dynamic situation on all fronts.

Ingvild Sørhus, Lead EU Carbon Analyst, Refinitiv: 25:41

Yeah. And we see prices have moved like crazy in some periods of time and then suddenly it sticks to 80. So it's really so it's what to say about where carbon prices is going. I think I support quite a lot of kind of the British elements or kind of at least the upside elements. Is that I mean we see more focus now on policy. Especially we saw yesterday and some other days that. Policy kind of statements from policy makers have driven the market, at least intraday. So it seems to be switching. Policy has been bit in the background for a while now. And I think we'll have more focus now once we have the vote in envy now and the repower plan, which is also interesting to see for the carbon market because in the communication that they put out previously this 10, 10 page on on the repower plan, they also mentioned possibly front loading of in innovation fund, to fund the transition transition that is needed off off Russian fossil fuels at a faster pace. And of course, the innovation fund. Then that goes into kind of the UTS that's kind of part of the UTS currently in the current legislation that's even evenly monetized throughout, until 2030. And of course, if you see some, if you see some proposal on, for instance, the innovation fund to move forward, the volumes that means kind, you will have more supply in the short term. So that's going to be interesting to see what the commission pro, if they propose anything on that, because it was only kind of one sentence in the communications upfront. So that will be quite interesting to watch for the carbon market. And that could be at least a short term driver. I think also for the you have quite, for a while now not seen any fuel switching taking place. So then it's been all up to emissions have been up to how much renewables do you have producing how much nuclear. And of course now we see the hydro situation is getting worse by the week now. It's quite it's lower than normal almost across Europe. So it's it's really you don't get that's another bullish element. And in addition, you have this. Quite bad nuclear situation in France, which is not helping, to try to stay off the Russian gas. So really you need to then so that's, I would say that's a short term fundamental actually. For policy. It's yeah it's, I think the most ambitious position that we will see will come out of the envy. But it will be interesting to see how now the different groups and different kind of politicians or member states are positioning themselves if they're getting more vocal on the et. S and then of course, prices should move on those on those topics. Another thing that is should be more to the downside is the European economy. We haven't really seen the full impact of. We are getting kind of new economic data coming out like gradually. And then of course the impact of the Russian War on European industry for instance, will probably be more visual in the data going forward. So of course that is something that could weigh to the downside. I would say. So it's, I think I know you, you're probably going to ask me about a hundred question as well. And of course can rule it out, but I agree with Marcus that I think don't think that's sustained. I think. Another thing is that it's a policy risk attached to the a hundred a hundred mark as well. I think if it's just spiral off and goes like a hundred, 110, 120, I think then it's another element for policy makers that they need to take into account. They should be de detached from the price, right? And also kinda know they, of course, a high carbon price is also generating a lot of revenues. That is that policy accuracy is needed. But I think, but I don't think c kind of in the short term, that crisis will stay above a hundred, both kind of to the the risk of kind of the economic downturn, not turn in Europe as well, that yeah.

Richard Sverrisson, Editor-in-Chief, Montel: 29:36

So they could hit that high, but they won't stay there.

Ingvild Sørhus, Lead EU Carbon Analyst, Refinitiv: 29:39

I'm a bit cautious on going over the hundred, at least in the next few weeks. I think that's, my gut feeling is that we are not getting there quite yet.

Richard Sverrisson, Editor-in-Chief, Montel: 29:48

That's very clear. But another element that came out of the envy proposal was, wish to, to limit the role of financial entities in the E-U-E-T-S. What do you think, this has been the role of speculators has been has taken a big has been a big topic as prices moved up very suddenly and as prices also crashed in March. Now, what do you think that this proposal is likely to pass?

Bernadett Papp, Head of Research and Analysis, Vertis: 30:14

Excellent question. Because we have to see that, policy makers are under pressure especially from compliance entities that have, as we mentioned before different other challenges with paying their gas and electricity bills to intervene. In this regard because simply we have seen skyrocketing prices since the LNCs became financial instruments and therefore also eligible in the portfolios of different financial entities. On the other hand we also have seen actually two reports. Of asthma, the financial authority of the European Union that did not find any evidence of misuse or manipulation of the carbon market from from the noncompliance entities side. So it's a difficult question and as you can see, there is. No real consensus among market participants either. I think that what we have seen from coming from envy and also proposals from from the EPP is. Quite a vague wording. I would say. I would like to compare it to Article 29 A because with the interpretation of that article of the directive, we are also struggling a little bit what prices mean. What are the three years in Article 29 A and in the same way how shall we interpret this short amendment? The members of the European Parliament added to the proposals. So I think it'll be very interesting to see the final word and how this comes into practice if approved by all the legislators. And second, we should not forget that even the current proposal. Contains one little addition according to which the European Commission should do an impact assessment by next summer. And if this impact assessment would show that, the limitations would be counterproductive for the market, for the health and liquidity of the market. Then the commission should propose other options, other solutions. Disregard. And just from the trading perspective if I have conversations be my colleagues who are trading on a daily basis they also say that, for example, even now if we have days with low liquidity spreads are increasing incredibly. And this is not good for any market participant and we have to recognize that. Those entities without any compliance obligation in the market contribute with liquidity to the market. So if you do not want to see big spreads and big volatility in the market or difficulties to hedge. Your emissions, then I think that we have to be very careful with these limitations. I'm really curious myself how this proposal develops. Then it gets through the different rounds of political negotiations.

Richard Sverrisson, Editor-in-Chief, Montel: 33:20

Absolutely. And Marcus, if I can turn to you here, we've seen. Some member states calling for interventional and price caps in wholesale power and gas markets. Are there similar calls in the ETS and is there a greater of risk of such intervention from the policy side?

Marcus Ferdinand, Head of Analysis, Greenfact: 33:37

I'll just go back quickly to, to to this back kind of question first probably 'cause I find the whole discussion is just a very simplistic obstruction of what's happening in the market. And it's in a way. To a completely different root cause, right? So the problem is to quite a few policy makers that, that EWA prices are high, maybe too high in their view, right? The, in a way, in order to change these high price levels. Have to see gas prices coming down or hydro was to fill, or nuclear availability in France to be better. Something that is very difficult as a policymaker in way to arrange. So curbing the participation of speculative participants might actually pour fuel to the fire, I would say, because in the end what you do, and that's what Berna said, right? Yeah, basically removing options to get a fair price assessment. When we look into kind of the commitment of traders reports in terms of let's say the noncompliance activities and especially on investment fund side, what you've seen is that investment funds basically reduce the net length from 34 million, I think over ice to 5 million the period after the Russian invasion. And that climb back to around 22 million or so by 6th of May. So what we have seen over the past few months is, the, especially after the de-risking calling the start of the war in Ukraine, liquidity in the market went significantly lower, right? And this was even without having any kind of political. Guard rail of non part and what we see, we've seen that, I think 21, there was an average daily trading volume of 30 million or so front contracts in, and yesterday with an almost 10% swing trading volume was at 23 million, which is just explaining the whole situation, right? So removing liquidity from this market. Will solve the problem of high price swings and will not solve the problem of the high price situation. And I think this is just very important to to discuss in that context. So this is not really solving this problem, I would say this position, my position might change, depending on the kind of volumes taken by noncompliance players in this market at the moment, I do not see this as a risk when it comes to other protective measures taken by member states. The question that you asked before Richard I see that also relatively critical, I would say, because. When kind of low income consumers that this might be a possibility for for generating some sort of a relief. But at the same time, it'll also create new problems mid to long term because you don't have, you mute the signals to invest in new generation capacities. And you mute. To go for these investments, which like mid to long term will probably make you running into even bigger. And I think this is why, it's, why it's so critical at the moment as well as policy. Which not interfering much could be or support bills potentially. But I think the price kind with the market, we'll probably create problems down the road.

Richard Sverrisson, Editor-in-Chief, Montel: 37:07

I'll let those wise words end this session. So Bernadett Ingvild and Marcus. Thank you very much indeed. Listeners, you can now follow the podcast on our own Twitter account, aply named the Montel Weekly podcast. Please direct message. Any suggestions, questions, or let us know if you think you have a good idea for a guest on the show, you can also send us an email to podcast@montelnews.com. Lastly, remember to keep up to date with all that's happening in energy markets on Montel News. You can subscribe on Apple Podcasts and Spotify or wherever you get your podcasts from. Thank you and goodbye.