European carbon certificate prices (EUAs) rose across 2021-22 supported by policy reforms to the Market Stability Reserve and high load factors of coal & lignite plants through the energy crisis. EUA prices have fallen significantly in 2023, with declines accelerating across the last month. Weaker economic conditions and lower power sector & industrial emissions are contributing to the decline.
After hitting 100 €/t in Feb 2023, prices have fallen to 66 €/t, with the EUA price now sitting around key support levels in the mid 60s. The decline in carbon prices has a key flow through impact on European gas for power switching levels and is an important factor behind recent declines in TTF (& other) hub prices. This is also contributing to declining power prices as the variable cost of marginal price setting gas plants declines. The market is watching closely to see if EUAs hold current price levels or break support and continue a more structural decline.
