European Carbon Market Waiting For Reforms

UBS maintains a neutral near-term but constructive long-term view on European carbon prices, anticipating that upcoming EU reforms and the need for industrial decarbonization will support higher prices despite recent volatility.

Key Takeaways

• 1.Near-term outlook is neutral to slightly positive as the market awaits clarity on EU reform details expected in July.
• 2.Medium to long-term outlook remains constructive, as higher prices are required to drive decarbonization in difficult-to-abate industrial sectors.
• 3.Carbon prices have been highly volatile due to geopolitical conflict and political pressure regarding market supply mechanisms.

Table of Contents

• Energy
• Historical emissions
• Emissions, by sector
• European carbon price
• Global asset class preferences definitions
• Appendix
• Risk information

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