This week’s outlook is bearish. To confirm that, we’re looking for a break of the recent low at €65.55 for a sign of further losses. A test of the lows last Friday evening saw EUAs bought back up again, but amidst building recessionary fears and with REPower EU, industrial shutdowns and EU electricity market intervention continuing to represent further downside risks, the outlook remains bearish. Of note this week: the Energy Council of the EU will hold an extraordinary meeting on an emergency intervention to mitigate high energy prices on 30 September. Next week more news should come on REPower EU, with a vote on amendments including the sale of extra EUAs. Prospects for that happening appear to be improving, though not all parties to the proposal are onboard with selling EUAs from the MSR. The head of climate legislation and emissions trading in the German economic affairs ministry did not rule out additional EUA sales in excess of the original €20bn target on Friday, immediately sending EUA prices 5.5% lower, though he did say that the Germans were currently sceptical of the proposal. Finally, the first spell of cold weather for Northern Europe prompted an uptick in natural gas demand – suggesting that sufficient cuts to gas demand may prove a challenge and turbulence could lie ahead for the major energy users who make up compliance buyers in the EU ETS.

  • 12.5 million EUAs are to be auctioned this week.
  • REPower EU proposal to sell additional EUAs gains traction: last week we talked about accelerated EUA sales from the MSR, €20bn worth over 12 months instead of €20bn over four years as the original proposal asked for. Now the possibility of selling €30bn of EUAs over 18 months may be gaining limited traction as the German government have told the journalists at Carbon Pulse they would consider the proposal. At €60 per EUA, that means 500 million EUAs sold. The yearly cap on emissions for 2022, for comparison, sits at 1.125 bn EUAs. This will be discussed in parliament on 3 October, any news coming out before then could prompt volatility for EUA prices.
  • REPower EU MSR sales not guaranteed: Denmark and the Netherlands have both put forward proposals for €10bn to be raised instead of €20 or €30bn, while EUA supply from future years could be used, instead of MSR EUAs. If opinion solidifies around not using EUAs from the MSR, we could see a relative rebound in EUA price – it all depends on what comes out of discussions and whether this represents a significant change from the original proposal to raise €20bn over four years. There is certainly more enthusiasm for the idea now than when it was released, when commentators were arguing sales of EUAs held in the MSR would fatally undermine the EU ETS.
  • 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 reduced indirect demand for EUAs via power consumption. Curtailment of industrial demand is known about and expected, so should generate a neutral price signal, though additional shutdowns could have a further bearish impact.
  • Gas demand spikes on colder weather – will there be enough reserves to last the winter? ICIS data (see chart 2) shows gas demand in 2022 rising above 2020 and 2021 levels for the first time since the summer months began as cold weather hit Northern Europe. It remains to be seen how residential and office heating will be able to respond to the required 15% cut to natural gas consumption – with Europe already running below the 15% target versus winter demand levels, trouble could lie ahead for major gas users if reserves are run down.
  • Wider economic malaise puts many markets in bearish mood: retail investors are buying record put options as downside insurance given the state of global markets. Central banks are increasing interest rates in an effort to soothe markets. This should translate into pessimism about carbon prices, except…
  • Strong coal, lignite fired power EUA demand continues: coal/lignite remains locked in. The required EUA price for switching from coal to natural gas fired power sits at €467 as of Friday, so losses to EUA prices should attract buying interest.
  • 30 September EU Energy Council meeting: the proposal to cap power prices from non-gas fired sources will be discussed in this meeting. Caps on prices would affect generation spreads for carbon intensive coal and lignite, and so potentially undermine EUA prices. Any news from the meeting could prompt volatility.
Technical analysis: Friday’s break of €65.50, ultimately closing the day at €66, might be a sign of things to come as EUAs test lower prices. If €65.50 is broken, we can expect further losses to €63.61, while to the upside we can expect to see €67.48 as the first resistance point. A break of this level could then send the EUA price higher to €69.92, closer to the “psychological” level of €70. EUAs are trading at the bottom of trend support (see chart 3). The outlook from a technical perspective is bearish.


R3: 73.80

R2: 69.92

R1: 67.48

S1: 65.50

S2: 63.61

S3: 60.29

Outlook: bearish


  • Indicative EUA Price: €64.50
  • YTD Average EUA Price: €82.68
  • MTD average EUA Price: €71.34



1 – Dec22 EUA price chart 2 – Gas demand – year on year – from ICIS
Chart 3 – technical trend lines

For more details on market outlook & protecting against your carbon risk, please email or call +31 20 522 0292