Today, at noon, three European commissioners presented the long-awaited ETS revision proposal and a package to incentivise electrification. For the European carbon market, the single most important element announced today was arguably the much-reduced linear reduction factor for the years 2031-2040. As the annual shrinking of issued EUAs will be slower, available volumes will be larger and last until 2047 instead of 2039 as under the existing framework. The aim is clearly to make the ETS into a powerful engine for innovation and investment. On the touchy topic of whether to include international aviation into ETS1, the Commission seems to have sought a compromise by proposing inclusion of mid-range flights, probably in the hope of avoiding conflict with the US and China.
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.
