UK Allowances have tanked in comparison to EUAs despite both trading schemes undergoing reform processes that would tighten their respective caps. Earlier this month, the UK government decided on a course of action that, while tightening the market, was the least ambitious of the options on the table. Prices initially followed the wave upwards before sliding for almost the entirety of the month of July. This may be a market acknowledgment of continued oversupply without an MSR comparable mechanism. With the gap between prices in the two markets widening to more than €30/t, CBAM exposure for UK industry would be much higher. The EU regulation is still far on the horizon, however this unearths complexity and uncertainty for UK industry and power generators – not to mention the unique case of Northern Ireland.
Nosediving UKAs and an ever-widening distance to EUAs From 21 February 2023, the front-December UKA contract has fallen from a ytd high of £85.41/t to Monday’s settlement price of £45.50/t – a slide of 46.7%. Traditionally, the EU ETS and the UK ETS hav…
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