By the end of July, the EEX auction calendar will be updated to reflect the Market Stability Reserve (MSR) intake. As laid out in the 28 May Commission communication on the total number of allowances in circulation, 275.5 million EUAs will be withheld from auction from September 2025 to August 2026. This breaks down to roughly 92 Mt for the remainder of 2025 and 184 Mt in 2026.
Two additional supply risks remain for auction volumes in 2025 and 2026:
A potential adjustment for the REPowerEU budgetary shortfall
Cancellation of allowances for maritime compliance
The REPowerEU plan to shift away from reliance on Russian fossil fuels is partially funded by the sale of EUAs drawn from the Innovation Fund and from future member state auction volumes. Already ongoing since 2023, these sales have a monetary target of EUR 20 billion.
In determining the initial volumes to be sold for REPowerEU, the European Commission assumed an average auction price of EUR 75/t. In the 2023 update to the EU ETS Auction Regulation, 231.37 million allowances were scheduled to be sold for the years 2024, 2025, and 2026 (with 35.3 million sold in 2023).
So far, the average auction price has been well below the estimated EUR 75/t. As of now, the revenue raised is around EUR 900mn behind schedule. The previously mentioned Auction Regulation stipulates that these scheduled volumes may be changed to meet the objectives of REPowerEU, taking into account the “revenue already obtained, the average auction clearing price for the six preceding calendar months, and the time remaining until 31 August 2026.”
The coming auction calendar update will be the final scheduled calendar update before the end of the REPowerEU sales, making it likely (but not certain) that an adjustment to auction volumes will be needed to bridge the revenue shortfall.
If this adjustment takes place using the criteria from the Auction Regulation:
Revenue already obtained: Appx. EUR 12.6 bn, assuming the average auction price remains roughly the same between now and 31 July
Revenue target remaining: Appx. EUR 7.4 bn
Average auction clearing price (H1): EUR 71.19/t
Time remaining until 31 August 2026: 12 months (from 1 Sep 2025)
At the 6-month average of EUR 71.19/t, the remaining REPowerEU volumes (86.13 Mt) would deliver a revenue shortfall of EUR 1.28bn. To bridge the gap, an additional 18 Mt will need to be added to auction volumes in 2025 and 2026. In total, REPowerEU volumes would be 34.1 Mt (+6 Mt) for the remainder of 2025 and 70 Mt (+12 Mt) in 2026.
Veyt expects for the REPowerEU volumes described above to be included in the July update to the auction calendar. We expect the market reaction to this adjustment to be bearish, but should not have an outsized impact when compared to the much higher volumes withheld for the MSR during the same update. REPowerEU will add 6.2 Mt in 2025, while the Market Stability Reserve will withhold 91.8 Mt from auction during the same period.
In a slightly longer horizon, the addition of REPowerEU volumes may spur a bullish reaction if the underlying EUA price rises. The Auction Regulation stipulates that once the EUR 20bn target is met, the sale of EUAs for this purpose will cease immediately. This will be an uncertainty that will be carried forward until REPowerEU comes to an end.
As shipping entered the EU ETS scope in 2024, the cap was adjusted by 78.4 Mt in line with the new source of emissions. However, compliance in 2024 and 2025 is set at 40% and 70% respectively. To adjust the cap to the maritime phase-in, the European Commission will cancel a volume of allowances equal to the difference between verified emissions and surrendered allowances for maritime operators. These volumes will be cancelled from future auctions.
We estimate that maritime verified emissions totaled 90.25 Mt in 2024, requiring a 40% compliance of 36.1 Mt. Per the EU ETS Directive, this implies a cancellation of 54 Mt from future auctions.
Similar to the REPowerEU adjustment, the timing of this hit to the market is uncertain, with some market participants speculating that this revision could take place as early as the July 2025 calendar update.
We assume that the 2024 maritime update will not take place in the July 2025 update, based on the language in the EU ETS Directive (Article 3gb) that states “once the difference between verified emissions and allowances surrendered has been established in respect of each year.” Essentially, the amount to be cancelled is not expected to be determined until after compliance (end September). Additionally, as of now, both total shipping verified emissions and total allowance surrenders are incomplete, making it unlikely that the Commission would act on adjusting volumes before the data is complete.
Assuming it is not on the July 2025 update, this opens the door to two possibilities for when the cancellations could be reflected in the auction calendar:
During the regular update to the auction calendar in July 2026
Through an extraordinary update to the auction calendar, most likely between October 2025 and January 2026
In our view, the second option is more likely. Extraordinary changes to the auction calendar have taken place previously. Notably, the change to REPowerEU for the 2024 calendar year took place in an extraordinary December 2023 update to the auction calendar.
Second, the language of the EU ETS Auction Regulation states that “any change to the volume of allowances to be auctioned in a given calendar year (…) shall be accounted for in the volume of allowances to be auctioned in the subsequent calendar year.” In this case, that would mean the maritime adjustment of allowances based on 2024 compliance would take place in the subsequent year – 2026 for the adjustment calculated in 2025.
Depending on the extent to which the market is anticipating these volumes to be cancelled from July 2025, a later update may prompt an initial bearish reaction for the period between September 2025 and December 2025. Ultimately however, the cancellation of 54 Mt is a bullish indicator.
Additionally, the lagging nature of the TNAC calculation would mean that the first impact that the maritime cancellation has on MSR withdrawals would begin in September 2027.
July 2025 calendar update
Certain, MSR intake (-92 Mt in 2025, -184 Mt in 2026)
Likely, REPowerEU adjustment (+6 Mt in 2025, +12 Mt in 2026)
Unlikely, Maritime cancellation (-54 Mt, if calculated before compliance this number would likely be lower)
‘Extraordinary’ calendar update (between October 2025 and January 2026)
Likely, Maritime cancellation (-54 Mt through 2026)
Unlikely, REPowerEU adjustment (volumes would vary, depending on auction volumes through H2 2025)
July 2026 calendar update
Unlikely, Maritime cancellation (-54 Mt)
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