EU Carbon Market Digest
Wednesday 2 April 2026
Market Snapshot
EUA benchmark trading around €74/tCO₂ following the European Commission's announcement on Market Stability Reserve changes. 2026 supply expected to be ~8% lower year-on-year, with analyst consensus averaging around €83/t for the full year.
E&E News / POLITICO • 1 April 2026
The European Commission proposed ending the automatic cancellation of excess carbon permits in the EU Emissions Trading System. Under the current rules, permits above a 400-million threshold in the Market Stability Reserve are permanently invalidated — a mechanism that has already cancelled 3.2 billion permits. The new proposal would instead retain surplus permits in the reserve as a supply buffer that could be released if prices spike, aiming to reduce volatility without fundamentally weakening the system.
Business Day • 1 April 2026
Carbon prices rose after the Commission's announcement, with the benchmark EU carbon contract trading around €74/tCO₂. Markets were reassured that Brussels avoided more aggressive interventions that some member states had been pushing for. The proposal still needs approval from both the European Council and Parliament, with a comprehensive ETS review scheduled for July 2026.
RTÉ News • 1 April 2026
EU environment ministers remain split on how far to go in reforming the ETS. Italy, Poland, and Austria have pushed for more significant intervention, arguing the carbon market amplifies economic strain from high energy prices driven by the conflict in Iran. The Netherlands and others are urging caution, warning that weakening the ETS would undermine its role as a driver of clean-energy investment. The Commission's proposal appears calibrated to navigate between these positions.
Enki AI • 2026
The conflict in Iran and broader geopolitical instability are reshaping risk dynamics in the EU carbon market. Energy price volatility is feeding through to carbon prices, while political pressure to ease the cost burden on industry is creating regulatory uncertainty. Analysts note that the carbon market is increasingly being pulled between its climate policy purpose and its impact on near-term energy affordability.
Bruegel • 2026
A new analysis from the Bruegel think tank argues that the EU ETS supports rather than undermines European industrial competitiveness. The paper pushes back against the narrative that carbon pricing is a drag on industry, contending that the system drives investment in cleaner technologies and that dismantling or weakening it would leave European firms less prepared for a decarbonising global economy.
ING Think • 2026
ING analysts highlight that the supply of EU allowances available in 2026 will be approximately 8% lower than in 2025, a substantial reduction that mechanically tightens the market. Combined with the ending of free allowances for the aviation sector and growing investment fund positioning, the fundamental supply-demand picture remains bullish. ING and other forecasters expect prices to average around €83/t in 2026, with some projecting triple digits by year-end.
ABN AMRO • 2026
Investment funds have increased their long positions in EU carbon to all-time records, signalling growing confidence in the asset's upward trajectory. The carbon market is becoming less dependent on natural gas price fluctuations and increasingly driven by its own structural dynamics — notably tightening supply, regulatory certainty from the Fit for 55 package, and broader institutional adoption of carbon as an asset class.