Q3 – EUR 80/t

The focus is still on the tariff war and the uncertainty over how US tariffs on EU goods will hit the Europe. With this uncertainty, there is some reluctance to bring the European carbon price higher.

The adjustment of the EUA auction calendar to account for Market Stability Reserve withdrawal from September is due in July. Together with this the announcement of potential additional volumes that might be added to fill the REPowerEU funding gap.

In July and August there will be focus on temperatures and cooling demand and the resulting need for more fossil fired power generation. With warm weather the focus will be, in addition to high cooling demand, on French nuclear availability. There might be reduction in nuclear production if river temperatures are too high.

2024 emission reporting will, for the second year, be in the end of September. There could be some price support ahead of the compliance deadline due to last-minute buying.

Q4 – EUR 95/t

After 2024 emission compliance deadline (30 September) it will be known how much the auction volumes will be reduced in 2026. In 2024 cap was expanded with 78.4 million EUAs to account for the inclusion of the maritime sector. The sector, however, had only 40% compliance obligation of emissions for this year. The maritime cap will therefore be retroactively adjusted, and the amount will be the difference between the maritime cap and compliance. We estimate this to be approximately 40 million EUAs.

Policy discussions and developments on the EU 2040 target could influence the price in Q4, especially if there is little progress on agreeing to the 2040 target in time for COP30 and if the market sees an increased risk of watering down overhead 90% target.

Fuel switching prices suggests coal is in the money for Q4.

Ahead of winter gas market will focus on gas storage levels and supply ahead of winter. In the case of a tight and nervous gas situation this could be a supportive factor for carbon.

The EUA auction pause in the second half of December could lend price support as well as the upcoming lower auction volumes from January 2026.

In December we expect higher price volatility ahead of the option expiry.

Q1 and Q2 – EUR 101/t and EUR 110/t

One of the big uncertainties in 2026 will be how much of the scheduled volumes need to come to the market to reach the EUR 20 billion monetary target. If the monetary target is met before the end of August 2026, the scheduled remaining REPowerEU volume will stop coming to the market. Market participants will watch closely the auction clearing price and the total revenues raised for REPowerEU in 2026. A stop of auctions earlier than scheduled is likely to give price support. If auctions are underperforming compared to budgeted with the prospect of more supply being added to the auctions could have a bearish impact on the carbon price.

In Q1 there will be focus on fundamentals like temperatures, availability of renewables and fossil fuel-burn.

In Q2 the upcoming EU ETS review and renewed focus on policy could be a price driver.