EU ETS
Our analysis of the EU ETS, ETS2 and carbon allowance prices
Carbon Price Forecast: What is the Outlook for EUAs by 2030?
The European carbon market is entering a period of historical tightening. Following a consolidation phase in 2024, analysts expect a structural appreciation of the EUA price, driven by the phase-out of free allocations and the high ambitions of the "Fit for 55" plan. Here is a breakdown of the price scenarios for the years ahead.
January 30, 2024
What are the rules in the EU ETS?
The EU Emissions Trading System (EU ETS) is a legally binding system that requires industrial emitters to purchase carbon allowances (EUAs). Regulatory interventions, including the Market Stability Reserve (MSR), have stabilized the market, increasing EUA prices to incentivize decarbonization and responsible investing. The EU ETS is designed to reduce carbon emissions, and improve responsible savings, by making it more expensive for industries to emit greenhouse gases, promoting investment in decarbonization technologies.
January 30, 2024
EUA price history: what are the drivers?
EU carbon allowance (EUA) prices are volatile but have generally increased. Initially too low due to oversupply and the financial crisis, prices rose after 2018 with market stabilization. 2024 trends depend on EU climate targets and industrial activity.
January 29, 2024
Does the EU ETS have an environmental impact?
The European Union Emissions Trading Scheme (EU ETS) is a cornerstone of the EU's climate strategy, aiming to reduce greenhouse gas emissions by setting a cap on allowances and incentivizing industries to invest in decarbonization. Investing in carbon allowances can accelerate emissions reduction and generate revenue for climate spending. As an instrument for responsible investing in green finance, the EU ETS encourages companies to invest in emission reduction strategies and sustainable development.
January 22, 2024
The EU ETS: Simple Concepts of Emissions Trading Schemes
The EU ETS (European Union Emission Trading Scheme) puts a price on carbon emissions, incentivizing companies to decarbonize by capping the total amount of emission allowances and allowing companies to trade them; this cap decreases yearly, pushing prices up and driving decarbonization and ethical investment. The system now includes individual investors, promoting responsible investing and offering opportunities for impact investment.
January 15, 2024
Writing about carbon markets for a living: Interview with Peter Sainsbury
Expert Peter Sainsbury explains why investing in EU carbon allowances (EUAs) has a direct climate impact by reducing available emissions and driving decarbonization, highlighting the potential for EUA price increases as the EU ETS emissions cap declines toward zero and industrial decarbonization becomes crucial. Understanding carbon markets and investing in carbon-related assets is vital for meeting net-zero targets and promoting sustainable investment.
December 18, 2023
The Carbon Allowance Tale - Part 3: A Financial Instrument
The European carbon market (EUAs) has evolved into a more mature and stable market, attracting diverse investors and becoming a financial instrument subject to greater oversight. This transformation, driven by policy changes, has made EUAs resemble commodity assets and has increased the volume of responsible investment, ethical investment and green finance. This makes investing in renewable energy more attractive.
November 24, 2023
AGC’s Path to Sustainability: Carbon Cost and the Real Economy
AGC, a major flat glass producer, faces increasing financial pressure from EU carbon emission regulations (EU ETS), spending a significant portion of its operating profit on carbon allowances. To mitigate costs and maintain competitiveness, AGC is investing in decarbonization strategies, including the VOLTA project with Saint Gobain, aiming for substantial CO2 emission reductions and supporting green finance and responsible investing. The company views decarbonization as essential for survival and is adapting to increasing demand for low-carbon materials and socially responsible investments.
November 23, 2023
Price action this year
European carbon allowance (EUA) prices stagnated in 2023 due to energy market dynamics impacted by the war in Ukraine, but are expected to rise in 2024 driven by reduced supply, regulatory changes, and market expansion, presenting opportunities for responsible investing. These factors support a bullish outlook for investing in the stock market related to sustainable investment and green finance. The regulatory landscape aims for carbon neutrality and promotes ethical investments through mechanisms like the EU ETS.
October 18, 2023