Sharp rally in EUA sends the market back into long-term uptrend, consolidation expected

By Frank O. Brannvoll, Brannvoll ApS, Denmark

Independent carbon market news remained scarce while the market followed particularly volatile gas and power prices. Trading was erratic with actions from speculative players in a relatively thin market. The focus is still on how the European Parliament elections will play out, as EU Commission papers for the next period have downplayed the focus on green transition, compared to European security and competitiveness. While April was not the compliance month, as this has been moved to September, the rising market still reported several companies following old procedures.

The market has broken back into the long-term trend after the EUR69 barrier was overcome. However, a very overbought market may need a consolidation.

Long-term prices for 2030 rose from EUR75 to EUR89, taking some of the pressure for many long-term renewable projects that still need prices above EUR100.

EUA front-year contract, July 2022-April 2024

The current Dec 24 price is at EUR73, up a massive 20 per cent and raising the expected range of EUR68-76.

The UK Allowance December 2024 (UKA) is up three per cent to GBP37 (EUR44) and increased its discount to 40 per cent to the EUA.

Brannvoll ApS maintains the forecast for 2024 to range between EUR55-95 with an average of EUR80 for the Dec24 contract.