This weeks outlook is neutral. EUAs are expected to trade between €70 and €75. The market looks torn between the bearish impact of industrial shutdowns and EUA sales as part of the REPower EU plan, versus carbon intensive power generation which remains predominant with all the EUA demand that entails. Furthermore, wind and temperature levels are forecast to drop below seasonal averages for the next few weeks, leaving fossil fuels to fill the breach. Looking to political developments, the EU’s efforts to address high energy prices mean cuts to power consumption at peak hours and reductions to gross energy consumption, which imply some degree of bearish risk for EUAs. At the same time, the European Markets and Standards Authority ESMA has been assessing how feasible it would be to broaden the list of eligible collateral for margin calls that have caused liquidity problems for European utilities – efforts to stabilise markets should be supportive for EUA prices, given strong generation spreads for coal and lignite electricity generation. REPower EU is up for discussion again on 3 October. The week ahead brings little in terms of further political news that could influence EUA prices, with the next meeting of note the European Energy Council’s discussions on efforts to soothe energy prices on the 30th of September.

  • 10.32 million EUAs are to be auctioned this week, followed by 12.5 million next week. 12.5 million EUAs were auctioned last week. 
  • Industrial shutdowns weigh on EUA demand: a substantial number of EU industrial installations are curtailing production or shutting down completely. ICIS estimate this means about 16 million tonnes less CO2 in terms of direct EUA demand, as well as less indirect demand for EUAs via power consumption. Curtailment of industrial demand is known about and expected, so should not have a further bearish impact on the market though additional shutdowns could have a further bearish impact.
  • Continued strong coal, lignite fired power EUA demand: coal/lignite remains locked in with the required EUA price for switching from coal to natural gas fired power reaching 541 euros as of last Thursday, even as gas prices declined. See the chart on fuel switching prices below.
  • EU market intervention to bring some stability? The European Commission proposes measures to reduce energy costs for European businesses and consumers. Most relevant to carbon pricing are:
    • Funding for utility margining requirements: EUA prices have dropped rapidly previously when gas prices spike, the theory goes that this made sense as EUAs are easy enough to buy back later and only required every April – so a logical thing to sell to free up cash. ESMA’s efforts should help utilities manage these margining requirements.
    • Peak power demand to be cut by at least 5% – with bearish implications for EUAs.
    • Overall electricity demand to be cut by at least 10% per member state until 31 March 2023. 
    • Revenue cap for non-gas power sources at 180 euros / MWh. This could have implications for profitability for coal and lignite power sources, thereby possibly bringing some fuel switching back into view.
  • Gas storage fills up, demand drops: EU gas storage is filling up, having hit 84% this week. Demand reduction efforts are showing improving results as well, though more work is required to meet a 15% reduction vs. usual consumption in winter months.For reference, as of last week savings were at about 138mcm/d vs. 300mcm/d.
  • Warnings against intervention directly in ETS: EUA prices rallied last week when key figures in the European Union institutions suggested direct intervention in the ETS in response to the energy crisis would be the wrong place to target efforts.
  • REPower EU proposal could become more bearish: right leaning politicians in the European Parliament are pushing for accelerated sales of €30 bn of EUAs over 18 months, rather than 20 billion over 12 months as the EPP have advocated for, or the slower sales raising €20 billion over four years as was originally suggested. The EPP also advocates for the MSR to recover any of these EUAs sold under the REPower scheme by 2030. More EUA sales might not make it through the legislative process as the likes of Denmark and Netherlands propose selling only 125 million EUAs / €10 billion worth.
  • Wednesday 21 September Options Expiry: ICE data shows there are 34.3 million EUAs worth of call options held at an €80 strike price, so we could see a rally towards that level ahead of Wednesday, though Monday’s trading suggests the market will struggle to gain as much as €10.
Technical analysis: a break below €65.50 suggests prices continue to drop. Any break above €74.66 might take prices higher towards the €80 euro level. €70 remains a strong support level, and 73.86 represents further resistance.

R3: 77.10

R2: 74.66

R1: 73.86

S1: 71.10

S2: 69.00

S3: 65.50

Auction timetable:

Week 37 Week 38 Week 39
# EUAs



10,323,000 12,494,500

Outlook: neutral


  • Indicative EUA Price: €70.57
  • YTD Average EUA Price: €83.03
  • MTD average EUA Price: €72.05



1 – Dec22 EUA price chart 2 – Fuel switching levels for EUAs

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