Overview

An 11% sell-off in EUAs last week pushed prices to their lowest level since June 2025, with the benchmark contract shedding €9 from the week’s open and only narrowly holding above the €70 mark. The move reflects a sharp deterioration in sentiment as political risk re-enters the carbon market narrative.

Speculation is mounting that policymakers may consider adjustments to the ETS. German Chancellor Friedrich Merz added to the uncertainty, suggesting the EU ETS should be revised or even postponed if it materially undermines industrial competitiveness.

“The elephant in the room is the EU ETS question but note that we are talking about it in the EU Council,” Merz said. “We had some very strong comments from colleagues in the east but also from the western parts of the EU.”

Concerns over carbon costs and industrial competitiveness are not new but a shift in tone from Berlin carries weight.