There has been very little incentive in the carbon market itself – the driver has been the TTF and coal prices moving first by the Israeli/US bombings of Iran and later in the month by the increased demand for fossil fuels due to very warm European weather lowering capacity for nuclear and less renewable production.
The market is now waiting for the final approval of the EU’s Carbon Border Adjustment Mechanism (CBAM) commencing in 2027 instead of 2026 – as well as the massive decrease in the numbers of importers that will need to declare their carbon emissions.
Under the new Danish presidency the EU has set ambitious targets for 2040 – and these will now have to translated into actions – in an environment with higher focus on competitiveness and security given the cost of increasing NATO spending to five per cent. In the EU ETS, the cement sector is asking for more direct reinvesting of the money it contributes into the system to support green projects.
The linking of the UK Allowance (UKA) to the EU ETS will likely take at least two years and will have no immediate impact.
EUA prices remained in the EUR68-75/t range during the past month, while long-term prices for 2030 again fell to EUR85/t. The front (Dec25) contract was down one per cent to EUR72.50/t when compared with last month’s ICR.
As the EU linking is not being implemented in the near term, the UKA December 2025 price slipped, dropping six per cent to GBP48 (EUR58). Brannvoll forecasts a range of EUR65-85/t in 2025 with a Dec 25 contract average of EUR75/t.
by Frank O. Brannvoll, Brannvoll ApS, Denmark
