If the political turmoil for the carbon market was not enough, the energy complex rally also had an impact. The market was falling towards major support at EUR67 for Dec 2026 when the Iran situation erupted and the sharply soaring gas and coal prices gave support to the market, due to massive compliance buying. Meanwhile the EU confirmed its 2040 targets, providing some calm to the fear of politicians disrupting the market.
However, in March and again in July, we will see volatile trading days as political remarks from Italy (wanting to abandon the EU ETS) to Germany (again supporting the market) will be discussed and speculators will be less active in the market, making it more volatile. There are now rising complications and distortions arising from missing CBAM verification companies.
This may lead to incorrect default benchmarks that could disrupt normal trade in direct contrast to the level playing field CBAM is intended to deliver. For cement companies outside the EU, they will risk adding multiple times the “correct” CBAM fee on the export. The Dec 2026 contract is unchanged at EUR71. It is most likely that EUR68 will act as a major support. The long-term EUA price for 2030 has decreased by EUR3 to EUR80.
Meanwhile, the UK Allowance (UKA) December 2026 contract has fallen 15 per cent to GBP40 (EUR46). Brannvoll ApS forecasts a range of EUR75-100 in 2026 with an average of EUR90 for the Dec 26 contract. The lower end is now in play and could see EUR65 in the short term.
By Frank O. Brannvoll, Brannvoll ApS, Denmark
