CO2: The return

As of last August, the financial world was already labelling CO2 as the best-performing raw material of 2018, with a nod to its price skyrocketing by 300% in one year (and nearly 400% if we take into account the peak of €25.16/tonne of CO2 reached on 10 September).

 Discussing the performance of a product that is generally seen as a tax seems provocative at the least! Are they saying that the CSPE [Contribution to the Public Electricity Service tax] is not very efficient because it doesn’t seem to have risen from €22.5/MWh since 1 January 2016? Have we tipped our hat to the performance of the CSG [general social contribution tax] which, as of 1 January of this year, leaped up 1.7 points from 7.5% to 9.2% (a performance of 22.6%!)?

These market shifts and envious comments are here to remind us (10 years after the great financial crisis and the fall of Lehman Brothers) that, when we’re talking about CO2 and its price, it’s not a raw material, nor is it a gas or thin air, but a financial product: the EUA (European Emission Allowances).

Our goal here is not to retrace the chaotic and sometimes inflammatory history of this product. As a reminder of this, we will make do with this diagram:

We are, rather, proposing that we shed some light on certain aspects and consequences of these changes in the market.

Reasons for this CO2 price increase

The progression of EUA prices already has a long history of being extremely volatile. As a market whose base is essentially regulatory in terms of the European Union, this market evolves as decisions are taken (or announced or expected). In the present case, the carbon market’s current performance is generally attributed to the market’s expectation of the January 2019 implementation of the market stability reserve (MSR), the key element of the UE-ETS reform adopted last year and published this year (Directive 2018/410 of 14/3/2018).

Impact on the price of electricity: A second CSPE

Electricity futures has also been a very ‘high-performing’ market these last twelve months! Over one year, the French baseload Cal ’19 contract rose from approximately €40/MWh to €60/MWh (turning in a respectable performance of 50%). Of course, the price of coal was also ‘high-performing’ at nearly 20%, but the primary factor in this increase continues to be the impact of the EUA price rise. This impact is even quantified in Article L 122-8.I of the energy code: 0.76 tonnes of CO2 per MWh (conveying the somewhat counter-intuitive reality of the French price’s serious dependency upon coal electricity). On this basis, the impact on the price of electricity may be estimated as falling between €15 and €20/MWh (i.e., 25-30%).

Impact on the consumer

Until now, the French consumer has been partially protected from this hike by the ARENH mechanism, which caps the cost of its basic supply at €42/MWh. However, this mechanism has a time limit (2025) and is capped for supply from suppliers who are EDF competitors (until now, the cap of 100 TWh did not apply, but with EDF’s market losses, this could occur as soon as the next allocations in November 2018).

Furthermore, following an additional mechanism implemented from 2016 (when the market price was below the ARENH price) for electro-intensive consumers (see Article L 122-8.I of the energy code), these consumers may be compensated for the CO2 impact on the price of electricity. But the basis for evaluating CO2 used for the compensation is only set at €5.91/tonne (it’s doubtful that this value will be revised), and this measure also has a time limit (2020).

These protections are therefore only partial, and the impact is already being felt by industrial consumers (and certainly will be felt soon by individuals).

Impact on the environment

Perhaps we should have started with this point, because it’s the aim of the European system of trading quotas of greenhouse gas emissions (SEQE in French), better known under its English name, the European Trading Scheme (ETS).

We could opt for cynicism and explore the changes in emissions in the French electricity sector, asking ourselves the simplistic question: what was the impact of this ‘double CSPE’ on emissions in the electricity sector?

From a wider standpoint, this limited impact of the ETS on the environment grew out of the debates and conclusions presented during the Conference on the ‘2018 State of the EU ETS’ in Paris on 13 June last (in the presence of the DGEC (Directorate General for Energy and Climate), EDF and a number of large industrial groups):

  • The ‘Control & Command’ policies are what have impacted the reduced emissions in the energy sector.
  • The role and impact of the ETS cannot be clearly identified as long as the price is below €30/tonne (i.e., until now).
  • Most large industrial players still have a credit balance of free allowances.

If the prices of CO2 were to remain permanently at high levels (which, in view of the history, is not a given), demonstrating a genuine scarcity of allowances for large companies, we would enter into a new paradigm. This mechanism would shift from a system that subsidises large European industrial sectors to a system that would tax these same companies.

Will it become a zero-sum system, now that the system is living on outside the Kyoto Protocol (i.e., outside the non-EU objectives)? Ultimately, the EU member states as well as various European funds for research and innovation are benefiting from the auctioning off of these allowances, and this revenue may, in the end, come back to the industry. Doubts are to be expected, and the critics of such a system are not just on the other side of the Atlantic. Pope Francis already pointed it out in 2015:

‘The strategy of buying and selling “carbon credits” can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors’ (Encyclical: Laudato Si)

Philippe Boulanger

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Each month, one of our experts publishes an article describing his view on a specific topic of the constant changes taking place in the energy market, with special focus on the French market.

Profesional Experience & Education

Diego graduated in Political Economy at King’s College University (London – 2021). He started his professional career in a family business in Madrid as an operations manager. Diego then studied a Master in Management and Master in Computer Science at IE University (Madrid – 2022), during which he participated as an Information Technology (IT) intern in a startup. In May 2023, Diego joined the HES team as an intern specialised in programming models. In his first project, he developed a software tool for modelling the unavailability of the French nuclear fleet. Afterwards, Diego has also participated in the development of new software tools for modelling price curves, generation asset performance and other topics related to the energy market. 

Diego Marroquin

Junior Consultant

Haya Energy-6

Profesional Experience

Céline joined Haya Energy Solutions in November 2021 as marketing and administration manager. She had a first professional experience in the tourism sector as a social media manager. At HES, her activities are focused on the development of the company’s visibility at European level through: commercial actions, content marketing and development of brand strategy. Céline is also involved in the management of the company’s communication: optimisation of the website (WordPress & Elementor), LinkedIn, publication of the monthly newsletter and the organisation of conferences. Céline participates in energy projects with the clients and acts as coordinator and project manager. Finally, she is in charge of administration (accounting, expenses management, invoicing).   


Céline graduated in Spanish and English Philology at La Sorbonne (France – 2018) and holds a Master’s degree in Project Management and Cultural Tourism (Clermont-Ferrand/ Buenos Aires – 2021). 

Céline Haya Sauvage

Marketing Responsible

Céline Sauvage

Investment Advice

“Decarbonization of the Energy and Transport sectors is arguably today’s main economic driver for the industry.”

Profesional Experience

His career started in civil engineering as a Project Manager in France, Martinique and Australia. Afterwards, he became the General Manager of a subsidiary in Venezuela. In 1992, he established Dalkia in Germany (district heating, cogeneration, and partnerships) and represented Véolia in Thailand. In 2000, he opened the commercial office of Endesa in France to take advantage of the liberalized retail market. From 2006, as a development Manager at Endesa France, he led Endesa’s plan for Combined Cycle generation in France and developed the wind and PV portfolio of Snet at the same time. Philippe Boulanger worked for 3 years at E.ON’s headquarters coordinating the company´s activities in France. He was strongly involved in the French hydro concession renewal project. As a Senior Vice President – Project Director at Solvay Energy Services from April 2012 to February 2014 he was in charge of the H2/Power to gas and European direct market access deployment projects. Philippe has been an HES expert since 2014.


Philippe Boulanger holds engineering degrees both from the Ecole Polytechnique and the Ecole Nationale des Ponts & Chaussées (France) and has a combined experience of more than 25 years in energy and infrastructure. In addition to English, Mr. Boulanger is fluent in French, German & Spanish.

Philippe Boulanger

Electricity Expert


“The world is changing. New investors pay particular attention to the energy sector while historical actors adapt their position to the market.”

Profesional Experience

Antonio started his career in the electricity sector in 1991 working as a member of the General Manager’s team at Sevillana de Electricidad (Spain). In 1997, he was appointed head of commercial regulation at Endesa Distribución. In 2000, he joined the mergers and acquisitions (M&A) department of Endesa Europe. He was appointed Managing Director of Endesa Power Trading Ltd (UK) in 2003. A year later, he became responsible for energy management at SNET (France). In 2008, he was appointed Managing Director of SNET (France). In 2009, he became Director of Corporate Development at E.ON France. In 2011, he founded Haya Energy Solutions (HES), a consulting firm focused on optimising the energy management of consumers, producers and retailers of gas and electricity. From 2015 to 2018, Antonio combined the consulting activity at HES with the general management of 2 production facilities in France (2 CCGTs x 410MW), owned by KKR. At the end of 2018, he joined Asterion Industrial Partners, an infrastructure investment fund, as an operating partner. Antonio currently devotes most of his efforts to the Asterion Portfolio, while advising through HES companies in the energy sector in France, Italy, Germany, UK and Spain. 


Antonio graduated from the Escuela Técnica Superior de Ingenieros of Seville (Spain) and holds an MBA degree from Deusto University (Spain). 

Antonio Haya