Whilst many ETS operators used to the old end of April deadline will have already purchased EU Allowance (EUA) shortfalls, many may still be looking to finalise EU ETS compliance obligations at what is an opportune time given recent price falls for EUAs.

Reduced liquidity over the summer period and speculator positioning kept EUA prices above €70 for much of August, but as traders return to their desks, we are seeing fundamental bearish pressures return which have pushed EUA carbon prices down nearly 5% this week.
 
At current prices under €67 for the benchmark Dec-24 EUA contract, the EUA price is the lowest in 6 weeks and is now below the average settlement price for the whole of 2024 (€66.76). The market remains volatile however so putting in place a compliance strategy to manage price risk is vital.
 
As the EU ETS target ambition increases to 2030 under the Fit for 55 package and free allocations to industry reduce with the adoption of CBAM in 2026, we see a paradigm shift ahead in respect of exposure to EU ETS compliance costs.
 
Given most carbon analysts forecast EUA prices to be back over €100 per CO2e by 2027 and higher by the end of the Phase 4, our view is that ETS operators face a choice on whether to 1) take steps to decarbonise, 2) budget for higher carbon prices or 3) use the carbon market to fix or “hedge” future EUA costs now whilst the market is at favourable levels.
 
With over 15 years’ experience in ETS carbon compliance, CFP Energy offers a full range of EU Allowance (EUA) trading solutions, including spot and forward transactions, dynamic "limit orders" to take advantage of sudden market movements and innovative structured products that can achieve significant discounts on current EUA prices.
 
For more information about CFP Energy’s carbon compliance solutions please see https://www.cfp.energy/compliance-carbon