Following the 4 July election, the UK carbon market has hit freefall and appears to be headed to pre-election announcement levels.
UKA prices fell steeply from March 2023, reaching a low of GBP 31.48/t in January 2024 and trading in the mid-30s GBP/t until May 2024. Then-PM Rishi Sunak’s announcement that a general election would be held in July sparked a rally for UKAs, climbing on expectations of more stringent climate policy and hopes of EU ETS linking negotiations. Following Labour’s landslide victory, prices have dropped GBP 5.46/t or 12%. The return to bearishness for UKAs is nothing new, as the underlying conditions that tanked UK carbon through mid-2023 are still in place.
No news is bad news First, the market is still facing regulatory uncertainty. In March 2022, the UK launched the reform of the UK ETS, centered on aligning the regulation with more ambitious climate targets for the period 2024-2030. In July 2023, the Auth…
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