Halfway through2024, EU ETS seems set for yet another year of record low emissions. Having dropped already on a mild winter, a cleaner power mix and low industry demand, Veyt estimates 2024 emissions to end 7% lower compared to 2023. Reflecting lower demand, EUA prices will also take cues from policy-side factors.

In the near term the full August auctions could weigh on prices, while uncertainty over the size of auction volumes to support REPowerEU is likely to prevail until the monetary EUR 20 billion target is reached. REPowerEU dynamics may turn to a bullish rather than a bearish risk factor if auction prices turn out higher than when the volumes were calculated. That risk, coupled with a tighter market balance coming in 2026 and 2027, could lend price support already in 2025, mimicking the situation ahead of the start of Market Stability Reserve in 2019.

Veyt predicts a steady EUA price uptick over the next four quarters, averaging EUR 68 /t and EUR 87/tin H2 2024 and H1 2025, respectively. Peaking in 2027 at 162 EUR/t, we estimate an average price of EUR 146/t for the remainder of phase 4.