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European Energy Markets
20JUL

EUA carbon breaks EUR 81 a tonne

2 min read
11:19UTC

The EU December carbon allowance ran to about EUR 81.35 a tonne by Monday, its highest since February, stacking fresh cost onto gas-fired generation.

← Back to Hormuz premium inverts the German spark spreadJump to analysis ↓
EconomicDeveloping
Key takeaway

EU carbon at about EUR 81 a tonne adds fresh pressure on the clean spark spread.

EUA December carbon allowances broke EUR 81/tonne on Monday 13 July for the first time since February, climbing from a flat EUR 79.04 settlement on Friday 10 July to about EUR 81.35 on a market-data snapshot around 13 July 1. EUA is the EU Emissions Trading System allowance that gas- and coal-fired generators surrender for each tonne of carbon dioxide they burn, so its price feeds straight into the marginal cost of thermal power.

The climb extends an established run rather than opening a new one. EUA first cleared EUR 80 on 25 June and settled EUR 80.17 on 30 June , so the EUR 81 print is the next leg up, not a break from range. Treat the exact 81.35 level with some caution: it rests on a dated snapshot rather than a confirmed exchange settle, while the EUR 79.04 baseline of 10 July is firmer.

With gas firm at the same time, CCGT marginal cost rises from carbon and fuel together, compressing the clean spark spread further just as gas-fired plant picks up the load French nuclear has dropped. The same squeeze showed up on 9 July, when gas and carbon rose together and compressed Germany's clean spark spread rather than the France-Germany spread .

Deep Analysis

In plain English

Carbon allowances are permits that power plants and factories must buy for every tonne of CO2 they emit under the EU's Emissions Trading System. The EU controls how many permits reach the market each year, and factories bid against each other for the shrinking pool. The EU has a rule that automatically pulls spare permits off the market when there is a surplus, which has been squeezing supply for a while. On top of that, the same heatwave that curtailed French nuclear plants (see the FR-DE spread story) is pushing utilities to burn more gas for electricity, and gas-fired power needs more permits. Both effects pushed the price above EUR 81 a tonne for the first time since February.

Deep Analysis
Root Causes

The EU ETS Market Stability Reserve automatically withdraws a share of unallocated allowances from auction whenever the surplus sits above a set threshold, which mechanically shrinks the pool of allowances available to buy even if nothing about underlying emissions changes.

That structural tightening is being amplified by short-term fuel switching: when nuclear output drops (as in the French curtailment) or heat lifts power demand, utilities lean harder on gas-fired generation, and each additional gas-fired megawatt-hour requires more allowances, adding demand on top of the MSR's supply squeeze.

Sources:Prestige Business Solutions
Mentions:EUA →CCGT →Germany →IEEFA →EU Emissions Trading System →Ukraine →France →
First Reported In

Update #26 · Gas and power decouple as French heat bites

Prestige Business Solutions· 13 Jul 2026
Read original →
Causes and effects
Caused by
TTF round-trips back above EUR 50
TTF holding above EUR 50 pushed CCGT marginal cost up alongside carbon, compounding to squeeze the clean spark spread.
Occurred 13 Jul 2026
Read story →
Clean spark spread reaches EUR 74
The EUR 81 print extends the EUA run that first broke EUR 80 on 25 June and held EUR 80.17 on 30 June.
Occurred 30 Jun 2026
Read story →
This Event
EUA carbon breaks EUR 81 a tonne
Carbon rising alongside gas squeezes the clean spark spread from a second direction just as gas-fired plant covers lost French nuclear.
Led to
EUA carbon slips back below EUR 81
EUA gives back part of the 13 July break above EUR 81.
Occurred 16 Jul 2026
Read story →
Different Perspectives
Marine insurers and AIS trackers covering Hormuz
Marine insurers and AIS trackers covering Hormuz
AIS data shows severe curtailment on 20 July, 479 vessels anchored, 36 dark, 123 still broadcasting inside the strait, not the closure the IRGC claims. War-risk premiums move on the unresolved CENTCOM-IRGC contest itself, since underwriters price the dispute as much as the count.
QatarEnergy
QatarEnergy
Ras Laffan has run at minimum output under force majeure into August since 9 July, a constraint already priced before this week's claim. The 17-20 July move is risk premium stacked on that standing loss, not a new physical loss at the plant.
ACER and the European Commission
ACER and the European Commission
ACER opened the REMIT reporting consultation on schedule on 16 July, giving firms to 11 September before a quarter to build systems against Regulation 648/2012. Brussels' separate silence on StromVKG state-aid clearance leaves Berlin's own capacity mechanism without legal authorisation.
EDF and French grid operator RTE
EDF and French grid operator RTE
France's discount to Germany rests on an ASNR derogation from the 28C river-cooling limit at Bugey that expires today, not on a nuclear recovery; Chooz, Golfech and Bugey restarts run to 25 July. The cheap leg holds only as long as regulators keep waiving the limit each heatwave.
German CCGT operators and grid balancers
German CCGT operators and grid balancers
German gas plants went off-merit on 20 July as the clean spark spread inverted to minus EUR 15 to minus EUR 21/MWh, sidelining the flexible capacity storage injection needs. Operators are pricing 2027-28 capacity revenue against Bundesnetzagentur's own admission that Brussels has not cleared the 9 GW StromVKG auctions.
LNG spreads desk
LNG spreads desk
The JKM-TTF arb flipped to a TTF premium of roughly USD 0.6/MMBtu on 15 July, the first time this cycle Europe has outbid Asia, yet no Atlantic cargo has rerouted west. Until a cargo actually moves, the desk reads the Hormuz premium as unconfirmed and the EUR 55 print as vulnerable to a fast reversal.