This newsletter was published 12.3.2025 at 17:51pm CEST

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

Carbon is trading even lower than a week ago, and there seems to be no end to the persistent bearish trend we have witnessed over the last six weeks. Fundamentals have played a major role, as power and gas prices eased alongside EUAs, which are now trading near year-to-date lows. One could argue that bullish positioning of investment funds pushed prices too high earlier in the year, while the unwinding of their positions in a bearish market has created a self-fuelling downward trend. The most recent CoT data shows that investment funds have reduced their net long exposure to 36 million tonnes. This trimming caused a relatively large drop, especially considering that some compliance buying may have occurred below 70 EUR for the December 2025 futures contract. Auctions over the past week offered no surprises, as most cleared near the prevailing spot market price. Anticipation among participants is growing in light of the upcoming quarterly option expiry. Option open interest favours puts, with 75 EUR being the strike price with the highest open interest—nearly 30 million allowances. The 75 EUR strike is followed by the 70 EUR level, though open interest here is lower, at almost 20 million tonnes. However, this figure is still significant enough to influence market movements. Considering the tense geopolitical developments over the last month and the upcoming first quarterly option expiry, increased volatility should be expected.

German power prices are up by 2.50 EUR since last week, with the front-year contract trading at 83.50 EUR/MWh. API2 coal prices are up by 2.50 USD since last week, with the Cal-26 contract trading at 104.50 USD/tonne. Front-year gas prices are up by 0.960 EUR since last week, with the TTF Cal-26 trading at 34.810 EUR/MWh. EUR/USD is up by 150 points since last week and is currently trading at 1.0920.

Price development of EUA Dec2025 futures contract