21SEP

EUA carbon breaks €81 a tonne

2 min read

15:34UTC

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

← Back to Russia and China kill Iran's UN monitor Jump to analysis ↓

ConflictDeveloping

Key takeaway

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

EUA December carbon allowances broke €81/tonne on Monday 13 July for the first time since February, climbing from a flat €79.04 settlement on Friday 10 July to about €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 €80 on 25 June and settled €80.17 on 30 June , so the €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 €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 €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.

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: EUA traded near or above €100/tonne in early 2023 on a similar combination of MSR-driven supply tightening and gas-for-power fuel switching after the Ukraine invasion cut Russian pipeline flows, showing the mechanism connecting power-market stress to carbon prices is not new.

Counter-parallel: That 2023 peak unwound over the following year as gas prices fell and fuel switching reversed, so a €81 print on its own does not establish a durable floor; the 2023 precedent argues the current level is as likely to prove cyclical as structural.

Consensus view: ClearBlue Markets has pointed to the EU ETS Market Stability Reserve as the mechanical driver behind carbon's grind higher through 2026, arguing that scheduled allowance withdrawals are tightening free float faster than falling industrial demand can loosen it, which is consistent with EUA holding above €80 since 25 June and pushing to €81.35 by 13 July.

Counter-view: IEEFA has argued the MSR story is only half the picture, and that this specific leg higher is fuel-switching demand: the same heat and nuclear-curtailment episode pushing up power prices is forcing more gas-for-power generation, and each extra CCGT hour run buys allowances rather than just reflecting scarcer supply.

Key tension: Whether EUA's break above €81 reflects a structural supply squeeze that persists once the heatwave ends, or a temporary demand spike from summer fuel-switching that reverses once nuclear output normalises.

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 €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 €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 €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 €81

EUA gives back part of the 13 July break above EUR 81.

Occurred 16 Jul 2026

Read story →

Different Perspectives

Shipping and insurance industry

UKMTO counted about 20 US-facilitated Hormuz transits a day to 11 September against only 6 visible on AIS, with traffic still around 90% below the 138-a-day pre-war baseline. War-risk underwriters cannot price hulls they cannot see, or resolve whether the tanker El Gaia hit a mine, as Iran claims, or a missile and drone, as CENTCOM says.

European refiners

European refiners, including Poland's Orlen, absorbed a roughly $26 gap between Dated Brent at $130.80 on 15 September and ICE Brent futures settling at $103.87 on 18 September, a spread that widened from $13.45 on 9 September rather than newly opening. Their futures hedges no longer cover what they now pay for physical barrels.

Saudi Arabia

Saudi Aramco zeroed European term customers' October allocations and rerouted roughly 60 million barrels to Asia through Ras Tanura and Sohar, using Red Sea and Gulf terminal capacity built years ago to cut Hormuz exposure. Riyadh reallocated existing supply rather than negotiating a shortfall with Europe.

Qatar

Qatar's energy minister Saad al-Kaabi told Bloomberg at the Qatar Economic Forum on 20 September that Bessent's two-year Hormuz-obsolescence forecast is wrong, and that Doha has deliberately built no bypass pipeline. Qatar's gas exports run through one waterway by choice, not oversight.

Iran (foreign ministry and Majlis)

Iran's foreign ministry and 130 Majlis deputies moved toward NPT withdrawal this week, with lawmaker Hossein-Ali Haji Deligani filing a triple-urgency bill on 20 September that Speaker Qalibaf has not yet scheduled. Tehran treats treaty membership as leverage still on the table, not yet spent.

Russia and China

Moscow and Beijing vetoed the Panel of Experts' renewal, maintaining Resolution 2231 lapsed in October 2025 and the 2025 snapback was never validly triggered, so the sanctions architecture the Panel enforces has no current legal standing. Both governments frame the veto as upholding law, not shielding Tehran.