The average price for carbon emissions under the EU Emissions Trading System (EU Allowances, EUAs) have reached record high levels, with December 21 EUA contracts exceeding €61/tonne. Overall, carbon price has doubled over the past year, spurred by more ambitious CO2 emission cut targets and by record-high gas prices due to limited gas supplies and reduced gas storage volumes. In addition, EUA auction volumes were lower in August 2021, with total supply halved to only 32 MtCO2, pushing EUA prices upwards.
In the first five months of 2021, the Benchmark December 2021 price had already increased by around 50%, in a context of strengthened EU climate policies and rising demand from financial investors anticipating a further price increase. New EU policies aimed to cut emissions across all sectors by 2030 and to reform the EU carbon market are expected to boost the demand for CO2 emission permits, raise their scarcity and spur prices.