EU carbon price hits highest level since August 2023

European Union carbon futures rose to 89.58 euros per tonne, marking a fifth consecutive weekly gain. The price increase was driven by a reduction in the volume of emissions permit auctions and expectations of a future shortage of quotas due to stricter environmental requirements. About this reports Bloomberg.

The price of benchmark carbon emissions permits rose 1.6% to €89.58 per tonne on the ICE Endex trading floor in London, reaching its highest level since August 2023. This is the fifth consecutive week that the value of carbon allowances has shown an increase.

ICE data shows that investment funds' net long position in carbon is nearing its highest level since early 2018.

Major reforms to the EU emissions trading system came into effect this year, including the abolition of free emissions allowances for the aviation sector.

In addition, stricter rules for shipping have been introduced, which increases the demand for permits from maritime transport.

Gregory Idil, senior carbon broker at BRS Shipbrokers, commented on the market situation: "Options markets are showing strong confidence in higher prices in early 2026." He added that auction volumes will fall by about 20% this year, contributing to a continued decline in supply.

An additional factor that could push prices even higher is the situation on the European natural gas market. While base gas prices are heading for a weekly decline, they are still 5% higher than the low set last month.

• The European Union continues to implement carbon import adjustment mechanism (Carbon Border Adjustment Mechanism, CBAM).
• In February last year, it became known that the European Commission proposes to dismiss the vast majority of companies from paying the EU carbon levy (CBAM).