EU Carbon Reform Package Anchors Analyst Forecasts Below EUR 100/t
European Commission reform proposals released in July have pushed multiple forecasters to cut EU ETS price targets, with consensus now firmly sub-EUR 100/t for 2026-2027.
Analysts at several firms revised down their EU Emissions Trading System price forecasts for 2026 and 2027 following European Commission reform proposals released on Friday (2026-07-10), Reuters reported on July 31 (2026-07-31). The revisions were broad, spanning multiple forecasting houses, indicating the proposals were read as a meaningful supply intervention rather than a technical adjustment.6,5
One analyst told Montel that the Commission's reforms would keep ICE EUA Dec-rolling prices below EUR 100/t, capping upside that had featured in earlier bull-case scenarios. Observers described the Commission's plans as the most sweeping proposed changes to the EU carbon market in years, though they added the package would not "fundamentally weaken" the scheme's emissions-reduction architecture. The reforms were designed to ease the burden on European industry, Reuters reported.5,6
Before the July announcement, Veyt had put a figure on the likely price impact. A senior analyst at the firm said on Wednesday (2026-05-20) that an ETS adjustment then under consideration could cut EU carbon prices by approximately 13% over a two-year horizon, based on expected changes to allowance supply. That estimate predated the Commission's formal text; the final package's supply effect will depend on how legislative negotiations alter the draft.1
Observers told Montel during the week of 2026-07-13 that the July 10 proposals would prove "slightly bearish" for prices. The structural integrity of the ETS was seen as preserved: if scarcity is maintained at the system level, compliance buyers cannot defer purchases indefinitely, and extended periods of price softness could attract opportunistic buying from emitters with long-dated obligations.5
Political pressure on European manufacturers has weighed on the price outlook for much of 2026. LSEG revised down its EU carbon price expectations on Thursday (2026-05-21), citing persistent demands from governments and industry associations to ease the ETS burden on manufacturers already dealing with weak output and high energy costs.2
Forecast revisions had been accumulating long before July. Reuters reported on April 30 (2026-04-30) that analysts had already made significant cuts to ETS price estimates for the next two years, citing policy uncertainty and unresolved questions about future supply levels. Those early reductions suggested the market had begun discounting reform risk months ahead of the Commission's formal text.4
The Market Stability Reserve is the mechanism through which much of the reform's supply effect will flow. Under current rules, when total allowances in circulation exceed 833 million tonnes, the reserve triggers a 24% reduction in auction volumes — the reform's treatment of that threshold and reduction rate is where supply modellers are most focused. Changes to either parameter would shift the EUA supply path materially through 2027 and into 2028.1
Some analysts have flagged a longer-term constraint that the supply debate tends to obscure. Josephine Steppat, senior energy analyst at Montel Energy Brainpool, wrote on July 1 (2026-07-01) that the carbon price system can remain an effective decarbonisation tool only if accompanied by faster infrastructure deployment and targeted investment in industrial transition. Those conditions lie outside the scope of an allowance supply adjustment alone.3
The durability of the sub-EUR 100/t consensus depends on how the Commission's proposals move through the EU legislative process. Any tightening of free allocation provisions or upward revision to the MSR intake threshold could force forecasters back toward higher price targets. A diluted final text giving more relief to heavy industry would cement the bearish case through the 2027 compliance period.5,6