EU carbon allowance price fell to EUR 92/t last week, with speculators likely taking profits

The price of European Union allowances (EUAs) fell last week, most likely mainly as a result of speculative traders taking profits, reports international energy news portal Montel, citing market participants. The EUA price hit a record high the week before last, surpassing EUR 100/t CO₂ for the first time ever. A new market report subsequently showed that investment funds are increasing their allowance holdings amid stagnant demand, which likely made them more willing to take profits and put downward pressure on the EUA price.

The price of an allowance for delivery in December 2023 (DEC23) stood at around EUR 93.9/t CO₂ on Monday morning. The EUA price for later years is also noteworthy: for delivery from 2025, it is well above EUR 100/t CO₂. The DEC25 contract is priced at EUR 103.6, while DEC26 is at EUR 107.9.

Record-high allowance prices reflect market expectations. After Russia's aggression against Ukraine, allowance prices fell amid fears of regulatory intervention. Those fears have since subsided, following EU representatives’ agreement last December on the revision of the market, reached while the Czech presidency was still in office. The agreed revision tightens the existing market rules.