Carbon market heading for 30 EUR/t

The European carbon emission market has made a new big price jump, and we could see the price on a CO2 quota break above 30 EUR/t in the near future.

This week has been very bullish on the European market for carbon emissions. Wednesday, the price on a quota reached the highest level in 11 years, and the uptrend continued Thursday, where the market closed with a quota price of 28.29 EUR/t.

The bullish sentiment is attributed to a supply decline, with a limited number of quotas put up for sale on the EU’ auctions during the summer. Meanwhile, the German government has announced that they are working on cancelling a noticeable amount of quotas when the country intensifies the closure of the coal power sector during the coming decade. Germany is one of the largest coal consumers in Europe, and a change in the country’s policy in this area is always an important factor for the carbon market.

The market is now at its highest level in 11 years and could very well be gathering strength before charging for new records during the summer. Several traders, who energy news site Montel has spoken to, believe that the market could break above 30 EUR/t soon, as technical signals support further increases. The highest price level ever since the market was invented is 31.00 EUR/t, which was reached in April 2006.

It could be decisive for the development, if we will see a new heat wave across Europe during the coming weeks. Rising temperatures will increase coal demand, which would strengthen the upside for carbon as well. Therefore, the market continues to keep an eye on the weather forecasts.