Investment funds are accumulating long positions amid the upcoming quota shortage

Carbon emission prices in the EU (EUA, contract for December 2025) exceeded €79/t in October, which is a seven-month high.

According to ICE data, on October 10, they fluctuated around €80/t.

The price increase was based on the future shortage of quotas, a reduction in auction volumes, and free distribution starting next year. Traders are accumulating net long positions and contributing to price growth.

However, since the beginning of this week, the price of EUA has fallen, dropping to €76.9/t on October 14. Investor sentiment, Carbon Pulse notes, has been affected by macroeconomic turbulence, which has led to some liquidation of speculative positions amid general weakness in most energy markets.

In September, European carbon allowances traded in the range of €73-77/t.

At the recent Carbon Forward Expo London conference, analysts from several companies agreed that EUA prices would rise to at least €100/t by 2027 due to a shortage of allowances.

In particular, consulting company ICIS forecasts an annual deficit of approximately 158 million EUAs in 2026 and 166 million in 2027 amid the completion of sales under REPowerEU and a reduction in benchmarks for free allocation.

Experts note that demand is also becoming more inelastic, with no significant reaction to price changes currently observed. In addition, they question the possibility of further capital injections into long-term offers.

The price growth scenario is primarily focused on future supply shortages. According to a report by BBVA, the transition to €100/t could be catalysed by the auction break that begins on 15 December. In addition, risks may arise from colder winter weather, low wind generation and the increasing influence of electricity and gas markets.

It should be noted that next year will bring fundamental changes to the European carbon market. Its final configuration has not yet been determined – this is likely to happen in the second half of 2026. However, experts advise market players to switch to long-term planning now, given the future shortage of quotas and the need to implement emission reduction technologies.