Carbon sharply higher after change of contract to Cal 24, now pressured from lower energy complex

By Frank O. Brannvoll, Brannvoll ApS, Denmark

The shift in contract to December 2024 sent the price EUR10 up without any real news in the market.
The overall energy complex has gone lower and as a result, the carbon price rallied up to EUR80. Several speculators went short again in the new contract. Industrial demand is still sluggish and is expected to worsen if a recession were to hit the US and Europe.

EUA front-year contract, March 2022-February 2024

The COP28 did not send any major positive signals for the short-term trading, but as an answer to CBAM, several countries will start their own ETS trading systems. Turkey announced a system set-up towards 2025, which may mitigate the impact from CBAM coming into force from 2026 and could see a growing focus on carbon reductions in several countries that   export to the EU.

The carbon price rose to EUR76, up from the EUR68 major support and is expected to trade within a EUR72-80 range.

The UK Allowance Dec 24 (UKA) has risen to GBP43/EUR50, closing the gap to just 34 per cent in terms of the discount to the EUA, down from 50 per cent in October.

Brannvoll ApS has forecast for 2024 to a range of EUR70-95 with an average of EUR88 for 2024 for the Dec 24 contract.