This newsletter was published 26.2.2025 at 16:59pm CEST

The current prices on the European carbon market are as follows:

It seems that carbon has found at least some equilibrium between 70 and 72 EUR for the December 2025 futures contract, after falling more than 10 EUR from yearly highs. It is hard to believe that prices were almost 20 percent higher just two weeks ago, despite, what many considered, an overextended rally in January. However, volatility appears to have returned, and EUAs are poised for larger moves this year compared to 2024. The decline was most likely driven by the end of bullish fundamentals and a shift toward bearish sentiment. The German parliamentary elections aligned with expectations and had no impact on the market. Meanwhile, renewables are playing an increasingly significant role, exerting selling pressure across the entire energy complex. Another factor contributing to the drop is the easing of gas prices. Front-month TTF futures have fallen from the 50s to the low 40s EUR range, alongside a decline in benchmark German power futures for year 2026. Currently, EUA prices roughly align with the 200-day moving average, a level that has historically acted as technical support, attracting long-term buyers. Several dip buyers have been waiting to capitalize on the 10 EUR correction, yet sellers continue to provide resistance. This could be due to multiple factors, including bearish short-term fundamentals such as unseasonably warm weather, declining gas prices, and strong renewable energy output. Additionally, recent CoT data does not support a bullish case. Investors still hold a net long exposure of 50 million tonnes, making the market more vulnerable to downside risks. Auction results from the past week have sent mixed signals—some cleared near prevailing spot prices, while one even cleared at a healthy premium to the secondary market.

German power prices are down by 5.20 EUR since last week, with the front-year contract trading at 83.05 EUR/MWh. API2 coal prices are down by 4.50 USD since last week, with the Cal-26 contract trading at 103.00 USD/tonne. Front-year gas prices are down by 2.440 EUR since last week, with the TTF Cal-26 trading at 35.345 EUR/MWh. EUR/USD is up by 90 points since last week and is currently trading at 1.0500.

Price development of EUA Dec2025 futures contract