EUA carbon settled near €78.22/tCO2 on Thursday 4 June1, extending past the €77.46 level whose recapture reversed the 11 May ETS benchmark revision. The benchmark cut took EUA consensus down roughly 13% in a session; the full recovery and extension tells desks the move was a technical bounce only in reverse. The structural ETS tightening narrative, driven by the Clean Industrial Deal's demand for higher carbon costs, is re-establishing itself as the dominant price signal.
For power desks the carbon input is inseparable from the gas input that broke range a day earlier. Carbon at this level gives the typical German H-class CCGT a clean spark spread of only a few euros per MWh in off-peak hours, barely enough to cover operating costs and insufficient to signal new capacity. Yet this is the unit that set Germany's day-ahead clear above its French neighbour on 3 June: it ran on merit-order necessity, not because the spread invited new generation.
The policy implication runs against EU carbon intent. High allowance prices should incentivise fuel switching away from gas. In practice, with French nuclear providing the bulk of the clean floor and Germany lacking an equivalent dispatchable clean base, the carbon price functions as a tax on German industrials rather than a switching signal: at current gas and carbon levels there is no dispatchable clean alternative to switch into on short notice.
