The ETS Investment Booster is taking shape, and since its inception after the European Council in March, the Commission has revealed more details on how it plans for the financing tool to support industry decarbonization in the coming years. As the first phase of the Industrial Decarbonisation Bank, 400 million phase 4 allowances are set to be utilised to generate EUR 30 billion of funding, likely starting from 2028.
The market impact highly depends on the modalities and the timing for monetisation and is affected by the response of the Market Stability Reserve acting on the additional supply. It remains unclear for now whether the allowances will be auctioned to the market to collect the revenues or whether they will be handed out as collateral to the projects qualifying for the support. Our modelling is focusing on the monetisation route in order to assess a full-fledged market balance and price forecasting perspective. In our most likely scenario, assuming a five year linearly decreasing monetisation period starting in 2028, EUA prices are lowered by 10 percent over the rest of phase 4 with limited impact over phase 5.
A weekly cap of what moved EUA prices and a clear view of the week ahead. We set out the drivers, their directional impact, and what matters next.
Veyt specialises in data, analysis, and insights for all significant low-carbon markets and renewable energy.
