Bearish sentiment for EUAs amplified in UK market

UK carbon prices fell much more sharply than their EU counterparts in February, widening the spread between UKAs and EUAs. The divergence was initially triggered by political turbulence in the UK that raised uncertainty around the priority of linking the two emissions trading systems. The gap has persisted due to heavier investment fund exposure in the UK market and uncertainty around potential policy changes in the EU ETS. Weak UK industrial fundamentals and high energy prices have further weighed on UK carbon demand and prices.