July Developments:
- During July, EUA price volatility slowed down as carbon prices traded rangebound between €84-90/tonne. In the second half of the month, carbon prices traded up on the back of technicals, but the gains were short-lived: The market sold off a few days later as the EU Commission announced slightly higher than expected additional auction volume (to finance the RePowerEU package) for the next 3 years.
- Over the last few weeks, utilities reported their generation data year-to-date, which confirmed the view that power emissions are down compared to 2022 on the back of high renewable energy generation and switching from “dirty” coal fired power generation to “cleaner” gas fired generation.
Outlook
- With auction volumes being halved as usual throughout August, prices might increase in the next few weeks if there is additional short-term demand for EUAs. This could come from the power side if the high temperatures in France heat up the rivers, so that the nuclear power plants - cooled with river water – would temporarily shut down. The gap would then be filled by emissions intensive fossil fuelled generation, thus increasing short-term demand for EUAs.
- As of September, the MSR-induced auction volume reduction kicks in again, but broadly keeping supply in line with previous year’s numbers. There is no regulatory event expected that could have an immediate impact on carbon prices, so that a lower volatility remains likely for now.
Key Events to Watch:
- No key events to watch in August
1 Commitment of Traders report published by the Intercontinental Exchange

July 2023
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