With the “fit for 55” recalibration of the EU ETS, the cost of CO2 emissions is starting to bite. We forecast a steady increase in carbon prices as the supply dwindles, the market gets balanced, and the MSR provides only a limited cushion. As Ursula von der Leyen said in her recent State of the Union speech: the Green Deal is now all about industry policy. There will be less and less room for emissions under a declining cap, and industries such as steel and cement will need to abate massively in order for the 2030 target to be met. The carbon price will reflect abatement costs in the covered manufacturing industries – our base case estimates a price close to €160/t in 2030.