This week we have a neutral outlook, though bearish risk increases as we near the resumption of full EUA auctions and yet another possible cut to Russian gas flows looms. EUAs are trading near trend support around €88.30 having given up recent gains that topped out at a new all time high of €99.22. The trend support is along same trend line that the market had failed to breach prior to the late July price drop. Potentially limiting price losses, French nuclear remains well below last years’ generation levels at a good 20GW less generation per day year on year, while coal fired power continues to dominate. There will be plenty of energy sector buyers for EUAs therefore. Maintenance on Nord Stream 1 might provide the key directional signal for EUAs this week. NS1 will close for maintenance on the 31st of August and the market will likely look to developments there – will gas flows resume in September? – for a signal as to what happens next for EUAs. European natural gas storage levels have reached 78% already, ahead of the 80% target for November, but the outlook remains uncertain given difficulties cutting gas consumption. The increase to the EUA price over August came as gas prices also moved higher, but limited EUA supply also contributed to the bull run. Now with auction volumes returning to normal from Thursday, the risk of a sharp move higher for natural gas prices in the event that NS1 gas flows are not resumed after 3 days of maintenance could represent downside risk for EUA prices through industrial demand destruction and recession potential. See below for details.


  • 8.148 million EUAs will be sold this week at auction, up from 4.421 million last week but still approximately 2 million below average weekly volumes for September. 
  • Nord Stream maintenance – 31 August – 2 September: the outage looks set to cut volumes entering Europe from Russia by 35 million cubic metres per day. Traders will be fearful that the gas supplies won’t return after maintenance. Typically a high gas price should prompt lower EUA prices.
  • More coal fired power could come online: Uniper will keep the Heyden 4 coal fired power plant online until April 2023 while STEAG is looking at bringing two coal fired units online. This represents additional EUA demand. Analysts are saying this is significant enough to largely offset the impact of industrial demand destruction, particularly as clean dark spreads (coal fired power generation profitability – see chart below) remain very good, making the cost of an EUA, even at 99 euros, almost irrelevant to the question of whether to sell and hedge that power production. The thinktank Ember show that power generation emissions rose by 12% in July year on year.
  • Gas storage filling up: European gas storage is now over 78% full. Strong gas storage should provide support to EUAs as this would imply some stability for energy markets, though supplies could still start running low by Q1 2023.
  • Gas savings plan working behind schedule: ICIS have provided some analysis showing that to hit gas savings goals, sharp further cuts to gas use are required. Daily natural gas demand is currently 11% lower than the 5 year average, equivalent to approximately 80 mcm per day saved. In winter however that 80% would only be about 4% of daily demand – so to cut peak winter daily gas demand, gas savings need to look more like 300 mcm per day. That should mean the risk of forced shutdowns remains. This is relevant because although additional energy sector emissions would likely offset industrial demand destruction and prevent EUA prices falling far, the announcement of any mandatory restrictions on gas usage should send a bearish signal and prompt a price drop – though that drop may not last long. 
  • Weak outlook for nuclear: EDF has announced French nuclear capacity will remain diminished with 5GW offline for a further 176 days. At least some fossil fuels will fill that gap in generation.
  • Recession risk: the poor economic outlook amidst the energy crisis has central banks warning of recession. The German economy posted a 0.1% gain quarter on quarter. Talk coming from the ECB suggests that further rate hikes are likely.
  • Schedule for further political level discussions: on Tuesday rapporteurs will report back to the Parliament’s ENVI committee on progress on Fit for 55 trilogue negotiations.
  • REPower EU remains on the table: though not a very popular proposition with some in the European Parliament, the idea of selling 250 million EUAs to raise money to move off Russian gas has not yet been dismissed. The 250 million EUA figure comes because the EU wants to raise 20 billion euros – €80 euros per EUA x 250 million = €20bn. A cut-off to speculators from the market also remains possible, though this looks a difficult proposition given many utilities are speculators.
  • Technicals: the 200 day moving average sits at €83.08, the 100 day at €84.7094 and then 44 day at €85.36. EUAs tried to regain some momentum on Friday, but the open lower suggests momentum is turning bearish. Last week double top candlestick pattern almost formed at the all time high of €99.22 – typically a strongly bearish signal. Relative Strength Index and MACD are starting to suggest the market may have further to fall, below support around €88.30. A break below this level might send the EUA prices further down to the €83-84 zone. On the upside, a break above €92.70 will encourage the bulls and might send EUA prices back to €97-99 levels.
R2: 99.22
R1: 98.50
S1: 96.42
S2: 92.38
S3: 88.34

Auction timetable:

Week 35 Week 36 Week 37 Week 38 Week 39
# EUAs 8,148,500 7,482,500 12,494,500 10,323,000 12,494,500

Outlook: neutral


  • Indicative EUA Price: €87.00

  • YTD Average EUA Price: €83.82

  • MTD average EUA Price: €88.40



1 – Dec22 EUA price chart 2 – Clean Generation Spreads

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