Overview

Last week saw EUAs really kick on and enthusiasm about tightness of supply into 2026 drive prices for the December 25 futures contract from a start of €78.78 to above €82.40 in just two trading sessions. The remainder of the week did then see a reversal of this spike and three days of declining prices. With Friday seeing a slump back into the €79s, but overall compliance carbon was up almost 1% on the week and many analysts seem confident to call that prices could return into the €80s this week. On the other hand, as we approach the expiry of the December 25 future, more traders will roll their positions to the December 26 contract: a trade which may limit price upside. There is also a lot of focus on political positioning on climate issues. The EU is seeking to balance some member states interest in watering down climate targets, the difficulty with bringing in new schemes like ETS2 and CBAM and the Bloc’s self-made position as guardians of the Paris Agreement as the US steps up its opposition