EU carbon surplus rises 3% on RePowerEU supply - Commerzbank

According to figures published on Wednesday, the number of certificates in circulation (TNAC) at the end of 2024 stood at 1.148 billion, which was actually around 3% higher than in the previous year, Commerzbank's commodity analyst Barbara Lambrecht notes.

More allowances shifted to market stability reserve

"This is primarily attributable to the additional supply of certificates to finance the RePowerEU plan. As a result, at 276 million, more emission allowances must now be transferred to the market stability reserve than in the previous year, when the figure was 266 million."

"This will reduce the auction supply in the 12 months from September onwards. Nevertheless, according to BNEF, supply is likely to exceed demand again in the current year due to the front-loaded auctions. This is slowing down the recovery of carbon prices, which, at EUR 70 per ton, are nevertheless around EUR 10 higher than at the beginning of April."

"However, long-term targets are the key factor for longer-term price developments. In this sense, the upcoming discussion on the interim target for 2040 is of great interest. The EU Commission intends to present a proposal on this matter on 2 July, which will include more flexibility for its proposed target of a 90% reduction in greenhouse gas emissions compared to 1990."