A large new emission trading system is about to start in 2027 with reporting requirements already as of this year. Our modelling shows that the market, albeit oversupplied during the first year, will face a significant undersupply from 2029 onwards. This in our view will trigger a sizeable wave of emission abatement, reflected in the price of ETS 2 allowances gradually increasing to as much as EUR 210/t in 2031 in our base case. Today, three years ahead of the market start, there is no readily available hedging instrument. The ETS 1 price proves to be a difficult proxy hedge as the two carbon markets are not connected and will face significantly different market balances when the ETS 2 starts.