2020: the year of record low gas prices?

Next year looks set to deliver record low gas prices amid a perfect bearish storm of an ongoing supply glut, mild weather, record high storage levels and a possible agreement in the Ukraine-Russia transit deal. 

Listen to four analysts provide their 2019 highlights, and forecasts for next year. 

Host: 

• Richard Sverrisson, Editor-in-Chief Europe, Montel. 

Guests: 

• Tor Reier Lilleholt, Head of Analysis, Wattsight, 
• Marcus Ferdinand, Head of EU Power and Carbon Analytics, ICIS, 
• Wayne Bryan, Senior Energy and Commodity Analyst, Alfa Energy, 
• Trevor Sikorski, Head of Natural Gas, Oil and Carbon Research, Energy Aspects. 

Transcript

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

Hello listeners and welcome to the Montel Weekly podcast, bringing you the most topical energy matters in an informal setting. This week, producer Anna and I decided on a slightly different format, didn't we, Anna?

Anna Siwecka, freelance journalist/podcaster: 0:15

Hello? Yes, we did.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 0:17

So it's coming up to the end of the year and we thought we'd take a look forward and a peek back. So we thought we'd, we'd speak to, you know, key in industry players or market participants, and ask them what the main issues were this year. And what will be the key market drivers going forward?

Anna Siwecka, freelance journalist/podcaster: 0:34

We have a very analytical episode today.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 0:36

Absolutely four of them. So covering carbon gas and Nordic power markets. So it should be make for some interesting listening, I hope.

Anna Siwecka, freelance journalist/podcaster: 0:44

Definitely. Let's hope so. Could you tell us a few words, who are our guests today?

Richard Sverrisson, Editor-in-Chief Europe, Montel: 0:48

So we have Marcus Ferdinand, who's senior analyst at ICIS. We have Tor Reier Lilleholt. Who's at Wattsight senior analyst. There we have Trevor Sikorsky of energy aspects, and we have Wayne Bryan of Alfa Energy, who's also a senior analyst.

Anna Siwecka, freelance journalist/podcaster: 1:05

Okay, perfect. So whom who shall we call first?

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:08

Let's call. Tor Reier.

Anna Siwecka, freelance journalist/podcaster: 1:11

Alright,

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:11

cool. In Norway.

Anna Siwecka, freelance journalist/podcaster: 1:12

Perfect. Is he in Oslo right now?

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:14

I'm not sure. We'll have to check.

Anna Siwecka, freelance journalist/podcaster: 1:16

Okay. We're actually saying hello here from Berlin, from Germany. Everyone is already getting into the Christmasy mood over here with Christmas market and so on, but we have to work.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:27

Exactly. Yeah. No glue wine for us, Anna.

Anna Siwecka, freelance journalist/podcaster: 1:30

Not yet. Yet. Not

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:32

yet. Hello. So, hello to How are Things with You? I'm fine, thank you. Excellent. And are you getting in the Christmas mood?

Tor Reier Lilleholt, Head of Analysis, Wattsight: 1:42

Yeah. Very soon. I'll start, Decorating the tree now, so it'll be interesting.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:46

Excellent, excellent. We're here to talk about the market this year. In your view, what would you say were the most significant developments in 2019?

Tor Reier Lilleholt, Head of Analysis, Wattsight: 1:55

I think 2019 has been a very interesting year and exciting to find a lot of new things to, to analyze. And I think I will go through the different important parameters. And I would start with the weather. Actually 2019 is an unusual year in total very normal, but we have seen a huge number of smaller shifts and they could just go through the year. We had a cold and dry January. We had a very wet and mild February, march. We shifted again to dry May very wet. Once again, dry July and wet August, September. It continues with a lot of shifts there, ending up with a dry October, November, and once again in December over to a wet condition. So definitely from my experience, we more often see a bit longer trends in one direction and looking. In the 20 years of history, I think the past two years has been very close to normal. I think you should watch out now for hydro trends might be more important for the next two years. But of course also new renewables will over time dampen the effect from hydro abit. But yeah, if we take the numbers then go to balance. We started last year with almost 15 to. But already during six months, we normalized that and both due to low hydro production and also due to more precipitation in that period. So that's important to, to, to the change. And the snow situation was well below normal during the wintertime, but due to very wet June, we normalized the hydro reservoirs as well after the summer.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 3:31

And where do we stand? Where do we stand now? Today in the Nordic region,

Tor Reier Lilleholt, Head of Analysis, Wattsight: 3:34

we stand now around normal, and we have a deficit around four to five tebo towers. So that is not far from normal actually. We have a small deficit in the hydro reservoirs, but there's snow conditions. It's close to normal, but it's early now in the snow conditions so far. So I don't see a major topic from the hydro at the moment. But again, this type of hydro has also led to our lot less export. And actually we have seen a lot of import in Norway so far this year. And that yeah, shows that there's another component that is very important here and that is the gas prices because that has been actually a very important thing in 2019. And I think that. 19, we'll be remembered from the year where the gas for the first time became cheaper than than coal as an input for the power market. So that is a important change. I think also this had some interesting consequences. In 2019, we saw lower prices in the thermal driven countries. The marginal cost for gas. Were low and Germany will this year be delivered lower than no pool system price. So it is very not that very often and it's very, yeah, it's often seen in very cold scenarios, but we have not seen cold and dry scenario this year.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 4:43

And that's because of increased renewables and the, and a low gas prices mainly than Toyota or,

Tor Reier Lilleholt, Head of Analysis, Wattsight: 4:48

yeah, maybe. I think gas prices are only a huge. Changed in, in this market 2019. That's significant. Yeah. Yeah, it's the first time. And we saw the gas prices lower than coal and I think we have not adapted to that. Yeah, to the largest entity in 2019. I think we will see more from gas in the future. Yeah. I also have some points that is important for. The market here for including in the marketer cost, you have the CO2 market and I think that they are important part of the fuel driven input. The 2018 was the year where C two went to a significant higher level. But in 2019 I think that is the year we saw a very sta stable high price at 25 euros over, over time, over busy time. Absolutely. That's an average.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 5:36

But if I can ask you then today, if we can then, do you expect that to be a key driver? Next year and how, you know, what are the other significant issues you see in 2020?

Tor Reier Lilleholt, Head of Analysis, Wattsight: 5:46

Definitely I comment. Very high level. We see now in the in the malco of coal and also on gas that is in history a very high price. But I think that we are still in a bit of bearish trend if looking at both CO2 coal and and gas. Gas level against coal will be very important for 2020. And already now we see. Gas prices the market cost two to three euros lower than the coal prices. So I have a fair bit that we see the same situation that we saw in 2019 that that could happen something with with the gas. And I think gas is now definitely on the battlefield ready to fight. Yeah, gas would be more important for the following years I think. Absolutely. So we have to watch the gas analysis a lot more now in.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 6:37

And just to round up, what do you think about the hydrology? What do you expect there, Todd? I put,

Tor Reier Lilleholt, Head of Analysis, Wattsight: 6:42

as I said, here, we have a close to normal situation. Now we, of course. For the next year. It's not very easy to say if you have some deviation from normal. Of course. But I can say that Q1 is very temperature dependent, so we have to watch out the temperatures. And also looking at the capacity balance we have for Q1. Because you have removed from the nuclear now. And you also have of course installed all more than 4,000 megawatts of wind power this year. But still, when it's cold, I saw only 10% of the installed capacity from wind was producing. So that's definitely in a cold spell. Could be. We'll test this cap capacity balance big time. I think so. I think we need a risk premium in Q1 due to the hydro or due to the climate temperatures. But of course, we very often see that the temperatures during the wintertime is a bit higher than what we see as a normal. And that will of course limit the potential of capacity prices. But watch out for a very cold spell. It could be testing some new levels. Yeah.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 7:47

Perfect. Thank you. Thank you. No problem. Thank you very much for joining the Tel podcast, and we'll speak to you again, I'm sure.

Tor Reier Lilleholt, Head of Analysis, Wattsight: 7:53

Yes, please.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 7:54

Thank you. Bye-bye. Thank you. Bye-bye. So, Anna, next on the line, we'll have Travis s Korski from NG aspects. He will tell us more about what to expect in, in, in gas markets for the coming 12 months. Hello, Trevor. Hi Richard. Hi. How are things? And welcome to the TEL Podcast. Thank you. I was just wondering, you know. We are both Arsenal fans. How are you happy with, uh, Freddie, Freddie Loberg at the moment? Well, we finally won a game yesterday. Exactly.

Trevor Sikorski, Head of Natural Gas, Oil and Carbon Research, Energy Aspects: 8:24

It's gotta be, gotta be some progress.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 8:25

For sure, for sure. Hopefully that will continue into the new year, but we're here to talk about energy markets. Trevor, what in your view, where the most significant factors this year, if we're gonna take first a peak back?

Trevor Sikorski, Head of Natural Gas, Oil and Carbon Research, Energy Aspects: 8:38

Yeah. If we look at. If we look at the gas markets, definitely this is gonna be a year where it's kind of been the year of moving into low prices and the market, trying to deal with low prices, both on the global stage and of course in the European market. Very, very high storage levels. Lots of pressure on prices to go low, some periods of very, very low pricing, a lot of fuel switching, being priced in. So coal to gas happening a lot across the, you know, across the year. Uh, just a lot of dynamics dealing with low gas prices and probably they're gonna be here to stay for 2020, but it's, you know, looking back on 2019. It was all about those low prices. I think the second thing that was really important last year, of course, was all of the issues around Russia. And that's particularly a European issue and there were so many of them. But certainly, you know, the Ukrainian transit issue, which still hasn't been resolved, is something that was playing out through the background, I think of 2019. Um, and certainly helped create some of the, what we saw, some very, very strong cont that. Being something, you know, which we lived with a lot, but you know, part of that was because the prompt was so weak. But part of that was because the forwards were being held up by, by by issues around what's gonna happen if you don't have Russian gas transiting The Ukraine come the 1st of January. Other, other issues with Russia was like, when was Nord stream going to come online? You know, Nord Stream two. A lot of that tied up with the transit agreements, of course, with the Danish refusing to give permission and trying to delay that decision to give permission to lay in Danish waters that continued until late, you know, late in the year when in October they, they eventually had. Make a decision on that and eventually allowed them to start their pipeline. So Nord Stream two, Turk Stream was in the background. And then of course there was the Opal issues and, you know, and then, and the fact that the, the ECJ uh, revoked the delegation on Opal and, and there was a lot of kind of, uh, you know, uncertainty about how the Russians, uh, you know, how gas problems gonna deal with those AL restrictions. Um. And, and that's kind of played out and those have been important. So lots of things around gas prominent, its supply, you know, um, lots of LNG coming into the market just because the market was going into oversupply. Um, and, you know, it was all about dealing with low pricing.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 11:05

We've also seen some details emerge maybe of. Of US legislation and potential sanctions against companies involved in Nord Stream two. How do you see this panning out?

Trevor Sikorski, Head of Natural Gas, Oil and Carbon Research, Energy Aspects: 11:13

It may be a case of too little, too late in some ways. I mean, if you look at Nord Stream two, you know, the sanctions that are being that were being talked about was on the pipeline. Vessels. The pipeline vessels are probably largely gonna be finished. Their job. Sometime in, in, in January, I think, you know, there are, there's some signs that the pipeline vessels have moved back or have moved into position in Danish water and about to start laying pipes. And so you'd have to get those sanctions in, you know, very, very quickly. And it, it's not clear that that's gonna happen this year, even though there's a little bit more of talk on that. If it does, it probably just makes it a little bit more complex, a little bit more time consuming to finish. The one thing that probably isn't gonna be complete. Completed this year could be some above water tie-ins in in German waters. And that might complicate it if there are a sanction that US sanctions in place. But most of that pipeline, both lines of that pipeline are almost, you know, are, are constructed and it is just gonna be to find some work arounds if you do get some sanctions in place.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 12:14

Sure. And what about next year, if we look forward a bit, Trevor, what do you think? Are we gonna con continue in this, uh. Low price environment or does a lot depend on, you know, the, the, the resolution of the, the transit gas issue between Russia and Ukraine?

Trevor Sikorski, Head of Natural Gas, Oil and Carbon Research, Energy Aspects: 12:28

Yeah, I mean, I think if you put to one side the Ukrainian transit issues, you would say everything is bearish European gas from where we are. You know, particularly the summer contracts look, look overpriced, everything has to come down in order to balance in the global market. Looks incredibly, you know, incredibly weak. If you look at. You know, they are incredibly thin and that suggests a lot of LNG is gonna come into the European markets in, in 2020, like, you know, more so than even in, in 2019. And, you know, without a very, very cold Q1 and, and, and without some sort of transit, then you are looking at probably, ending the year with more gas, ending the winter with more gas and storage. So, and less flexibility probably in the gas markets'cause you've already priced in much of the gas into power. And it does feel like 2020 will be the lowest point for the the European gas markets. So lower than 19 probably 2021 when you get there you would see some things tightening it up just in terms of the LNG. You know, the continued march of new LNG supply capacity begins to slow when you get out there, but you've still got a lot of, you know, new trains. You've, you've got at least four very big trains in the US still to come online. Uh, probably in the next, you know, the next six months. That's gonna continue to add supply. So it looks very, very low. Uh, now I think the big question is, you know, do you get a supply interruption? And, it's pretty late in the year. We still don't have res resolution on that one topic of, of Russia, Ukraine. I mean, it kind of feels like the political fallout from those, you know, from having a, you know, certainly a sustained disruption, maybe even a short disruption. Might be too big for either party. The Russians have shown that they're willing to kind of have some kind of short term arrangement for them. That's a year, but I mean, probably the Ukrainians would have to at least accept something shorter than that, maybe three months or six months just to give more time for negotiations to resolve, the outstanding issues there. It is gonna go down to the wire. You know, there is a lot of brinkmanship there and it could be very, very late in the year before we actually find out, you know, what kind of solution they might put in place for Q1. Certainly if you had Q1 in Europe without Russian gas transit in Europe Ukraine, into Europe, then you would see, I would think some very, very, some much higher Sure. Gas prices and a lot. So all, all on this, yeah. Uh, from prices.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 15:02

So that's one that's perspective deal. Yep. Yeah. But Trevor, if I finally, if I could just sort of ask you one thing. It is, it is, you know, the Christmas season. Um, if I were to grant you one wish mm-hmm. Uh, for the market for next year, what, what would you, what would that be?

Trevor Sikorski, Head of Natural Gas, Oil and Carbon Research, Energy Aspects: 15:17

That's a good question. Um, I mean, we've certainly got. Yeah, it is. I mean, I'd like some socks, but apart from that, it's exactly for the

Anna Siwecka, freelance journalist/podcaster: 15:28

market.

Trevor Sikorski, Head of Natural Gas, Oil and Carbon Research, Energy Aspects: 15:29

For the market. I think, you know, we are in a period of ful supply, so certainly, you know, some, greater demand I think would be the one thing that you would say, is what the market would need to kind of help balance it, it out. And certainly, you know, I think, you know, in general what we'd like to see, you know, just. On a more personal level, of course, is a very strong European green deal coming out. I think that would, you know, certainly be good for the, for the carbon. Uh, you know, it certainly put upward pressure on the carbon market. Um, but that kind of, you know, uh, increase, um, Glo increase global ambition on emissions reduction would be the one thing that would, um. We'd really kind of look

Richard Sverrisson, Editor-in-Chief Europe, Montel: 16:07

for and hope for. Excellent. Excellent. Trevor, thank you very much for joining this week's podcast. Thank you, Richard.

Anna Siwecka, freelance journalist/podcaster: 16:13

So we know what Trevor needs for Christmas exactly. His friends and some weekly socks.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 16:22

That was Trevor Sikorski, head of Natural Gas. Colin, carbon Research at Energy Aspects and next in line is. Is Wayne Bryan of Alpha Energy. I'm looking forward to, it'll be good. More, more gas market, uh, insights, I think. Yes. Yeah. Hello?

Wayne Bryan, Senior Energy and Commodity Analyst, Alfa Energy: 16:39

Hello?

Richard Sverrisson, Editor-in-Chief Europe, Montel: 16:39

Hello, Wayne or should I say Wayne Alpha? How are you? How are things going? You getting in the Christmas mood Wayne?

Wayne Bryan, Senior Energy and Commodity Analyst, Alfa Energy: 16:47

I'm, I'm very Christmasy at the moment. Yes, and I'm very much looking forward to the Christmas period.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 16:51

Well, today we're sort of talking more about the market this year and the expectations for next. So, but let's start with a little look back. Um, what in your view were the key issues in the gas market this year, Wayne?

Wayne Bryan, Senior Energy and Commodity Analyst, Alfa Energy: 17:04

Oh, well, that we've had several really, I mean, the prices have fluctuated quite. We had that huge trifecta of announcements in September that pushed the market up 20%. We had concerns around L lead flows. I remember in early sort of March, April that people were very concerned about the summer. Prices sort of ramped up and that was actually a sign of some sort of commercial flow optimization. We've had different sorts of weather. Um, we've, we've had some demand from the power sector, not as strong as last year because the French new situation's been a bit better. It's been a sort of up and down year, but for me, the main thing is as we come towards the end of the year, a lot of the things spoke about and talked about, including for myself and some other peers, was about this sort of oversupply and how market was sort of over at. As you can see, if we look at prices the last couple of days, some contracts were at levels from 2016, and I think you remember your conference I presented at. Mm-hmm. I sort of talked about that and the potential for the gas market, and this was, when was the conference? It was sort of six weeks ago perhaps. Yeah.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 18:20

Something like that.

Wayne Bryan, Senior Energy and Commodity Analyst, Alfa Energy: 18:21

Yeah, absolutely. It was that time I pulled

Richard Sverrisson, Editor-in-Chief Europe, Montel: 18:23

up. About six weeks. Yeah. Very prescient, prescient of you Wayne.

Wayne Bryan, Senior Energy and Commodity Analyst, Alfa Energy: 18:27

Yeah. And and at that time I do recall mentioning about how I think the prices were sort of gonna drift back towards 2016 levels. If there, if the stake remain fast forward sort of six weeks later, and here we are, prices are indeed at such levels and a lot of the risk premium has been. Russian. Also has had a huge impact. This year we're finally seeing oversupply in a big way. Again, as towards we get to, as we're at the end of the year, it's sort of exacerbated now with around 20 cars that was on their way to the UK as we speak.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 19:11

Wow. Yeah. So, I mean, you had your crystal ball out six weeks ago, Wayne, and you were proved Correct. What about looking forward to next year? I mean, what do you think to, what do you think will be the key drivers in in 2020?

Wayne Bryan, Senior Energy and Commodity Analyst, Alfa Energy: 19:24

Uh, again, also once I didn't mention was obviously the trade war and Brexit. I mean, there's a lot of things been going on this year. Absolutely. But they still start. Yeah. As I start thinking next year, I can start remembering some of the stuff happened this year as well. But for me, for me, I think the main drivers, um, for 2021 looking firstly sort of some sort of order is let's get this transit flow agreement signed off. From Putin, his advisors, and also from the Ukrainian president and the Ukrainian energy people from nap, gas, et cetera. And it gives us confidence now. And you saw the market reaction yesterday that deal will indeed be signed. Now, I always thought this would happen, as I've said to you, I think several times before, for several reasons. Yeah. And now we're see it happen. I know there's probably concerns around sort of how long the deal is gonna be. It won't be one year and it won't be 10. Which I'd still be surprised at. So that is getting that done first and foremost. If we see some gas flowing into Germany via Ukraine on January the first, that's gonna bode very well for the markets. Yep. There's still some weather risk as well. Again, I didn't mention the weather, but the weather's been very mild this year. I think it's been one of the hottest years on record. I believe this year has been. Once we get to the end of the year, and also we haven't really seen, we didn't really see a super hot summer. And we didn't really see how so far really seen a cold winter. Yeah. So again, weather risk is something that I'll be looking out not only in the basin, the Pacific, some fundamental drivers affecting European market also to l That's also something also improve. Will the trade war get resolved again? We've had ups and downs all year regarding this, and we've got the 15th, I think is the next deadline that people are looking towards. You see, equity markets have sort of sideways trading now, waiting for this news, and again, if that gets signed off, we'll, should see an improvement in economic conditions, which as of the. Um, any improvement in economic conditions can also help, uh, in terms of quality markets as well because they've been affected. So that's something, something that's important.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 21:51

Wayne. It, it's the season for giving. And if I were to grant you a wish for next year what, what would that be?

Wayne Bryan, Senior Energy and Commodity Analyst, Alfa Energy: 21:59

I think I'd like. Sort get point. Uh, it causing problems everywhere, like Brexit, Brexit still. So I to see a bit economic, uh, sort. That would be sort of my wish. A geopolitical sort of slow down removal of some risks. We've seen a lot of geopolitical concerns this year. So yeah, I'd like to see a smooth Brexit and also like to see some sort of resolution to this endless sort of trade war and endless barbs from both sides from US and China. I'd like to see an end to that as my wish.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 22:39

Perfect. Wayne. Excellent. Have a great Christmas and we'll speak again in the new year, I'm sure.

Wayne Bryan, Senior Energy and Commodity Analyst, Alfa Energy: 22:44

Yeah, you too. And we'll definitely speak soon. Have a good one.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 22:47

All the best, Wayne. And last but not least. Is Marcus Ferdinand, head of European Power and Carbon Analytics at ICIS. He'll tell us all about what to expect for carbon in the months to come.

Marcus Ferdinand, Head of EU Power and Carbon Analytics, ICIS: 23:01

Hi, this is Marcus speaking, ISCI s

Richard Sverrisson, Editor-in-Chief Europe, Montel: 23:02

Hello and welcome, Marcus Ferdinand, head of European Power and Carbon Analytics at isis. I wanted to ask you in particular about what you think were the most significant carbon market developments this year.

Marcus Ferdinand, Head of EU Power and Carbon Analytics, ICIS: 23:15

Hi, Richard. Yeah, 2019 I think was was quite a busy year for car markets. I mean, we've seen quite a few ups and downs. I think over the course of the year, the price has been fluctuating between 19 and and 30 euros, which is obviously relatively high band. I mean, in general, I think the market was, yeah, basically looking into the impact of low gas prices. So we have seen quite a high degree of fuel switching this year. Which in a way constrained UA prices, I would say on the upside. We expect to see around 105 million tons. Lower emissions actually from the power sector compared to 2018. So around 60 million of that is the switch from coal to gas and another 40 million is renewables, which I think is quite substantial

Richard Sverrisson, Editor-in-Chief Europe, Montel: 23:55

to load. Those are big numbers, especially.

Marcus Ferdinand, Head of EU Power and Carbon Analytics, ICIS: 23:57

Yeah, especially if we look into where the gas price is at the moment and um, how it might change. Um, I mean, in the end, looking at low gas price environments and carbon prices still. Being able to touch 30 euros, I think tells you some sort of a story. Then I think other factors that the market looked at obviously dynamics around the. Allowances associated with the potential phase out, no clarity as of yet. But there might be clarity emerging as we speak. So we've seen a few statements there. Obviously the entire year was overshadowed by Brexit, uncertainty and nervousness. So we've seen lots of volatility related to that. And well, carbon traders rather looking at, kind of, uh, British broadcasting to see what the price might do, um, rather than looking at the fundamentals because it had such a big impact. And then, yeah, as I said, I think 30 euros on, on the, um, on the upper, um, kind of, uh, end was some sort of a psychological barrier that the market didn't, didn't pass. Mm-hmm. Yeah, it's gonna be very interesting to see what, what what the next year brings, whether that's that boundary kind of persists or whether we are going to see some sort of a different direction there.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 25:06

Exactly. That was gonna lead me into my next question marks, you know, what are your expectations for next year? So in terms of, of prices, do you think we'll see, you know, will we breach that 30 band? Will we come down to, you know, around 20? And what will be the key drivers? Will, will be the more of the same, or you know, will new other issues come to the fore, do you think?

Marcus Ferdinand, Head of EU Power and Carbon Analytics, ICIS: 25:27

Yeah, well that's a good question. I think some of them will stay the same, obviously.'cause we haven't resolved, uh, we haven't seen the Brexit, um, kind of, uh, discussion resolved yet. And we have also a few other topics which will stay like the German coffee out for sure. There's a few new topics which would come, which I think is the Green New Deal. So some of that yeah, will be more details will be revealed. Already this week, Wednesday. So, and then the heads of state and, and governments, um, might endorse actually 2050 carbon neutrality target by end of this week. Yeah, already like gearing up for next year. So by March we expect the carbon neutrality target then to be enshrined in legislation of political agreement permits. And by October, I think the, kind of like the new commission said that it will present a 2030 target increase legislation, which obviously has quite a high impact on how European current prices will develop.'cause this 2030 targets increase will need to be translated into Yeah. A change. ETS target, right? So those so, so the Green New Deal, I think entails quite a, an additional storyline that wasn't present in the market for too much in, in 2019. Fundamentally what we would see is that 2019 is still undersupplied, but much less compared to 2019. So we'll see more auction volumes coming to market in 2020. Part of it is related to excess Deion volume from Poland. We have a few un auctioned EA FTA volumes, which will make it to market. And then obviously once Brexit is resolved we will see the entire UK auction volume from 2019. Entering the market.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 26:51

Maybe we could say if Brexit is resolved, but Yeah. You seems, yeah. Yeah. But it's

Marcus Ferdinand, Head of EU Power and Carbon Analytics, ICIS: 26:55

always always Ds in here, obviously. Right? I mean, as an analyst you always speak in ifs.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 27:00

Of course, of course. Marcus. Uh, excellent. I mean, I think, you know, we want to be, you know, focusing very clearly on, on the green deal, and if that means a tightening of of the 20 30 target, then that's gonna be clearly something we should. Keep a close eye on. Thank you very much. It's always a great pleasure to have you on the podcast. So all the best for now. And yeah, and happy Christmas and happy new Year. Alright, take care, Richard. Bye. Thank you. Bye. So Anna. I think there should be a big thank you to our guest, Toray, Trevor, Wayne and Marcus. And I think there are several key areas that listeners, you should be keeping a close eye on the potential for a cold spell in the first quarter of next year. The details of the Green New Deal coming from the commission, Germany's Coal Exit and what that means for coal plants potentially coming offline and also for cancellation of EUAs. And I think it's clear that, you know, potentially we could see very low gas prices in the foresee future. And I think that's all for this week's episode. So it's it's goodbye from me.

Anna Siwecka, freelance journalist/podcaster: 27:58

Greetings, uh, from Berlin and goodbye from me as well. And keep up to date with all the stories on Monster News. Follow us on LinkedIn and Twitter, and you can subscribe to the Monster Weekly podcast on Apple Podcasts and Spotify. So see you next week. Yep. Bye bye.