EU carbon prices slump to fresh lows amid US tariffs, emissions decline

European carbon allowances were hovering near five-month lows on April 4, as US tariffs fueled bearishness across commodity markets.

The price plunge was somewhat tempered by news that emissions under the EU Emissions Trading System fell by 5% in 2024, in line with market expectations.

EUAs were trading at Eur63.10/mtCO2e ($69.33/mtCO2e) at 1548 BST on April 4, down around 8% from a week earlier, according to Intercontinental Exchange data.

EUAs have been experiencing a streak of losses over previous weeks, due to lower gas prices at the Dutch TTF hub as market participants monitor developments around ceasefire discussions between Russia and Ukraine.

Platts, part of S&P Global Commodity Insights, assessed the EUA nearest December 2025 contract at Eur66.34/mtCO2e on April 3. This was the lowest price so far in 2025.

"While nervousness remains among traders, with current prices at year-to-date lows, we expect compliance buyers to step in," analysts at CFP Energy wrote in a note.

Tariffs, emissions cut expectations

Geopolitics, particularly US President Donald Trump's announcement of new tariffs, were dominating the energy complex, even as the tariffs excluded most energy imports.

"The news of Trump is igniting some spirits. The market is being swept by tariffs," Gregory Idil, a senior carbon broker at BRS Shipbrokers, said, adding that the next support level was Eur60-62/mt with an increasing amount of appetite around those levels.

"The correlation between Dutch gas TTF and EUA prices has also recently increased, with both commodities reacting synchronously to the wider bearish forces prevailing on markets."

Another trader pointed to tariffs as a bearish driver for carbon prices, explaining that they spell "doom for the economy." The trader said: "I expect EUAs to go down to Eur50/mtCO2e."

Other market participants disagreed, saying that there was a long way to go before reaching this level. "There are quite a few support levels to cross [before] reaching Eur50/mtCO2e," said a broker.

"Emissions data and fears about the impact of US tariffs on the EU economy [are driving prices down]," a carbon analyst said, adding that clients had started buying into the market for compliance reasons.

Germany's EUA auction on Friday settled at Eur63.80/mtCO2e, the lowest auction price in 2025 so far, EEX data showed, further weighing on EUA prices.

UKA-EUA spread narrows

UK Allowances continued to hold onto linkage-related price gains recorded over the previous weeks, while the spread against EUAs tightened further.

UKAs for December 2025 were trading at GBP43.47/mtCO2e ($56.59/mtCO2e) at 1551 BST on April 4, down 1% from the March 28 settlement price, ICE data showed.

Platts assessed UKAs at GBP45.04/mtCO2e on April 3, up 0.4% day over day.

"EUAs are ... quite liquid, the UK is not liquid, and the hope is to be linked to the [EU] ETS, so no need to touch UKA to reflect all the negative effects of this gloomy [economic] picture," a trader said.

Meanwhile, UK ETS prices remain above levels seen before reports of linkage considerations. Platts UKA prices were assessed 24% higher on April 4 compared with the beginning of the year.

The spread between the EU and UK nearest December 2025 contract narrowed to Eur12.91/mtCO2e on April 3 from Eur14.53/mtCO2e on March 27, Platts data showed.