Since mid-January, European carbon markets have seen a significant correction.
UKA futures (DEC26) have nearly halved, trading around €37 compared to approximately €73 in January. EUA prices have followed a similar trajectory, with the DEC26 contract down almost 30%, from around €92 to €67.
Carbon is one of the main building blocks of European power prices, especially in markets where gas sets the marginal price. Lower carbon costs feed directly into lower forward power prices, potentially opening up more favourable procurement conditions for industrial consumers in the coming quarter.
For energy-intensive sectors such as metals, chemicals, and manufacturing, cheaper power is a meaningful lever. However, carbon markets remain volatile and sensitive to policy developments, economic conditions, and weather.
The Question
Can European industry get a reprieve from elevated energy costs, and for how long?
