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The price of carbon allowances on the European Union’s Emissions Trading System (ETS) has held around the €6 per metric tonne mark following last week’s 6 per cent gains.
A UK-based carbon trader told Utility Week that the market price for carbon emissions rallied higher on 8 October due to increased utility buying, breaching resistance levels of €5.75/mt to climb to highs of €6.09/mt by the end of the day.
The rally continued into the following day’s trade with next year’s allowances reaching €6.15/mt.
A note from trading firm CF Partners said the increase in price for EU allowances (EUAs) was initially prompted by large scale utility buying. Higher prices then attracted buying from speculative players to boost pricing levels further.
Analysts at Reuters Point Carbon attributed the initial gains to limited supply. The amount of allowances entering the market fell almost 50 per cent as no auctions were scheduled in Germany or the UK, helping to lift prices.
“We expect EUA prices to take a breather following the large jump last week,” Thomson Reuters Point Carbon said in a note on 14 October.
CF Partners agreed that there was “limited upside” for prices given generation margins in the wake of the rally, adding that the price is likely to remain “in a range from €5.80 – €6.15 in the short term”.
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