The carbon price in the EU has surprisingly reached a high level, approaching €100 per tonne. This is partly due to the coming cold weather, which will reduce wind power production. The benchmark EU emissions allowance (EUA) contract for December 2023 closed at 98.
Another event that will have an impact on prices is the ECB meeting. The central bank plans to release the minutes of its latest meeting on Wednesday. EUAs are the main currency used in the European Union's Emissions Trading Scheme (ETS), which forces manufacturers, energy companies and airlines to pay for every tonne of carbon dioxide they emit as part of the bloc's efforts to meet climate targets. Demand for energy is likely to increase in the coming days or weeks because of an incoming cold front combined with lower wind speeds.
The "Fit for 55" agreement, which the European Union has put in place as part of the European Green Deal, focuses on policy instruments to reduce greenhouse gas emissions by 55% by 2030 and achieve net neutrality by 2050.
The current weather forecast for north-west Europe is for temperatures to average 4 degrees Celsius above seasonal norms between 16 February and 2 March. So it is questionable whether EUA values will continue to rise. They are likely to be higher for some time and then stabilise or fall.
