With a 20 percent drop since the start of the year, the European carbon price is now trading at its lowest levels since the Russan invasion of Ukraine in March 2022. Looking ahead, we expect a continued lowered emissions pattern due to a weak energy complex and a frail economic outlook to weigh on prices throughout the year. The shift in compliance deadline till September may lower demand in the coming months, while current uncertainty over the exact RePowerEU volumes sold to the market beyond 2024 should be lifted as the year progresses. We expect baseload support from climate policy – the 2040 target debate brings alive the prospect of a tight future while market participants are facing a de facto 174 Mt cap cut in 2024 alone. We expect a progressing rise in prices over the year, and estimate an average EUA price for 2024 at €76/t, down 15.6% from our previous forecast in September at €90/t.