Jan 12, 2026
EU carbon prices approach €89/mt due to positive market sentiment.
EU carbon prices remained mostly stable in the week ending January 9, driven by strong demand despite mixed signals from initial auctions.
As per Intercontinental Exchange data, EU Allowances were priced at Eur88.94/mtCO2e ($103.41/mtCO2e) at 1236 GMT on January 9, reflecting a 0.71% increase since January 2. Platts, part of S&P Global Energy, reported the nearest December EUA price at Eur88.25/mtCO2e on January 8.
Midweek, EUAs dropped due to lower gas prices in Europe, but with colder weather predicted in the coming days, traders anticipate continued robust industrial demand.
Traders and analysts believe that EUAs will be influenced by weather conditions and dynamics within the power sector in the short term. Periods of low wind energy production or cold weather can prompt higher fossil fuel generation demand, thereby increasing the need for carbon allowances.
A Europe-based analyst indicated that "Cold weather and a significant decrease in auction volumes for 2026 should exert short-term pressure," suggesting these factors could offer "slightly bullish" signals, keeping prices above Eur88.
The latest ICE Commitment of Traders report indicated that investment funds' net long positions slightly decreased for the second week in a row, reaching 115 million EUAs as of the week ending January 2. The reduction was 1.2 million allowances since December 24.
The analyst noted that this decline was not overly substantial, likely amounting to profit-taking during the Christmas period, leading to closed positions.
Another analyst from Europe projected that net length would probably decrease after the first quarter.
Most analysts anticipate this bullish trend to persist throughout the month, bolstered by ongoing supply constraints and strong financial positioning.
S&P Global Energy Horizons analysts predict that EUAs will average Eur85/mtCO2e in the first quarter and Eur86/mtCO2e in the second.
They stated in a recent note, "Prices are expected to remain high as the market looks ahead to the 2026 emissions cap reduction and decreasing free allocations."
Auction supply is set to decline in 2026, with the latest calendar revealing a reduction of 52 million allowances, reflecting canceled allocations related to the maritime sector’s 2025 emission permits.
UK Allowances remained steady just below GBP70/mtCO2e, supported by the momentum from December's rally, which was driven by expectations of progress in linking with the EU emissions trading system.
The gap between the two markets narrowed significantly in recent weeks, dropping to just below Eur10/mtCO2e on January 8, marking the tightest spread since late May.
UKAs experienced a surge following the agreement between the UK and the EU on December 16 to finalize negotiations on linking their emissions trading schemes ahead of a summit set for spring 2026.
On January 9 at 1237 GMT, UK Allowances were priced at GBP68.73/mtCO2e ($92.09/mtCO2e), according to ICE data. Platts assessed the nearest December UKA price at GBP68.52/mtCO2e on January 8.
As per Intercontinental Exchange data, EU Allowances were priced at Eur88.94/mtCO2e ($103.41/mtCO2e) at 1236 GMT on January 9, reflecting a 0.71% increase since January 2. Platts, part of S&P Global Energy, reported the nearest December EUA price at Eur88.25/mtCO2e on January 8.
Midweek, EUAs dropped due to lower gas prices in Europe, but with colder weather predicted in the coming days, traders anticipate continued robust industrial demand.
Traders and analysts believe that EUAs will be influenced by weather conditions and dynamics within the power sector in the short term. Periods of low wind energy production or cold weather can prompt higher fossil fuel generation demand, thereby increasing the need for carbon allowances.
A Europe-based analyst indicated that "Cold weather and a significant decrease in auction volumes for 2026 should exert short-term pressure," suggesting these factors could offer "slightly bullish" signals, keeping prices above Eur88.
The latest ICE Commitment of Traders report indicated that investment funds' net long positions slightly decreased for the second week in a row, reaching 115 million EUAs as of the week ending January 2. The reduction was 1.2 million allowances since December 24.
The analyst noted that this decline was not overly substantial, likely amounting to profit-taking during the Christmas period, leading to closed positions.
Another analyst from Europe projected that net length would probably decrease after the first quarter.
Most analysts anticipate this bullish trend to persist throughout the month, bolstered by ongoing supply constraints and strong financial positioning.
S&P Global Energy Horizons analysts predict that EUAs will average Eur85/mtCO2e in the first quarter and Eur86/mtCO2e in the second.
They stated in a recent note, "Prices are expected to remain high as the market looks ahead to the 2026 emissions cap reduction and decreasing free allocations."
Auction supply is set to decline in 2026, with the latest calendar revealing a reduction of 52 million allowances, reflecting canceled allocations related to the maritime sector’s 2025 emission permits.
UK Allowances remained steady just below GBP70/mtCO2e, supported by the momentum from December's rally, which was driven by expectations of progress in linking with the EU emissions trading system.
The gap between the two markets narrowed significantly in recent weeks, dropping to just below Eur10/mtCO2e on January 8, marking the tightest spread since late May.
UKAs experienced a surge following the agreement between the UK and the EU on December 16 to finalize negotiations on linking their emissions trading schemes ahead of a summit set for spring 2026.
On January 9 at 1237 GMT, UK Allowances were priced at GBP68.73/mtCO2e ($92.09/mtCO2e), according to ICE data. Platts assessed the nearest December UKA price at GBP68.52/mtCO2e on January 8.