EUA carbon allowances rose to roughly €77.46 in late May, the highest since April, clawing back most of the ~13% consensus cut that followed the European Commission's 11 May ETS benchmark revision. An EUA, or EU Allowance, is the permit a power generator or industrial emitter buys under the EU Emissions Trading System to cover one tonne of carbon dioxide. The 11 May revision had been read as a structural loosening. The late-May print says otherwise.
Supply tightening, not sentiment, is doing the work. The annual cap falls by around 180 Mt year-on-year, free allocation is shrinking, and the free allowances handed to sectors covered by the Carbon Border Adjustment Mechanism, the EU's levy on carbon-intensive imports, are cut 2.5% in 2026 and 5% in 2027. Fewer allowances chasing the same compliance need lifts the clearing price, and a supply-led move does not unwind the way a sentiment bounce would.
For a gas or power desk, that carbon print feeds straight back into the storage story. A higher EUA lifts German power clearing and compresses clean spark spreads, raising the marginal cost of the gas-fired plant doing the injecting. On 21 May the German carbon stack already set €106 day-ahead clearing, with CCGT running off-merit against that level; carbon at €77.46 keeps that floor in place. The pressure comes from the supply side, so it does not ease when an Iran headline knocks TTF lower the way a US-Iran deal report did on 26 May.
