European carbon prices have dropped below 60 €/t in the past week, lowest levels since Q3-21. Two key drivers:
- Weak power & fuel demand, reducing demand for EUAs
- TTF prices moving to the bottom of the coal to gas switching range across winter 2023/24, further reducing carbon emissions in the power sector.
There are several key areas to watch out for moving forward however:
- The extent of any power & fuel demand increase as prices decrease
- The phased inclusion of shipping in the EU ETS from January this year
- The longer term EU cuts to the supply of ETS permits (62% committed cuts by 2030).
We will be delving into the impact of the inclusion of shipping in EU ETS in this Monday’s blog article.
