Liese defends financial traders as EU ETS reform debate intensifies
MEP pushes back against curbs on speculators as market weighs oversupply risk from proposed rule changes.
Senior European Parliament member Peter Liese said on Wednesday (2026-07-15) that financial companies should continue to be able to trade in EU carbon markets, pushing back against views that they should be constrained amid the bloc’s most sweeping ETS reform talks in years.4
The proposed reforms, expected from the European Commission on Friday (2026-07-10), have split the market. Some policymakers and industrial buyers see financial traders as a source of price volatility that needs tightening. Liese’s stance signals the Parliament may resist any move to shrink speculative participation, a key source of liquidity in the ICE EUA contract.4,3
The EU ETS will survive under the proposed changes, Liese said. But the question for traders is at what price. Analysts have already cut their carbon price forecasts for the next couple of years, citing uncertainty over future allowance supply and policy direction.2,6
The Oeko Institute warned in May (2026-05-21) that the reforms pose a “major risk” of renewed oversupply through 2040, potentially flooding the market with more allowances than the system needs. That scenario would gut the scarcity premium that has underpinned EUA prices above €80 for much of this year.1
Yet the ICE EUA Dec contract settled at €82.55/tCO2 on Monday (2026-07-20), holding near recent levels despite the bearish reform narrative. That resilience suggests the market either doubts the final shape of the rules or is pricing a slower phase of oversupply than the Oeko Institute models project.1
Broadly, the reform package is seen as slightly bearish for prices, observers told Montel the week of Monday (2026-07-13). The Commission’s aim is to shield industry from soaring carbon costs — a concession to manufacturers that implies more allowances in the near term.3
The emergency adjustment the Commission already unveiled in April (2026-04-01) did exactly that: it boosted permit supply to cap prices. That intervention was a template for the current reforms, but a permanent structural change carries different market consequences than a one-off release.5
Liese’s defence of financial traders is a signal worth watching. If the final legislation retains full speculative access, the EUA curve may hold its term structure better than if liquidity is squeezed. A reduction in financial participation would likely widen bid-ask spreads and amplify intraday moves on thin order books.
The tail risk that could invalidate the current consensus — that reforms are mildly bearish but manageable — is a political push for deeper industrial relief that adds a much larger volume of free allowances or delayed cancellations. That scenario, which the Oeko Institute flagged, would push the market into persistent surplus and cap price recovery for years.1
For now, the EUA Dec contract trading near €82.55 on Monday (2026-07-20) suggests the market believes the Parliament will water down the most aggressive supply expansions.1
The next concrete test comes when the Commission tables its formal text. Until then, the market is pricing an outcome that keeps allowances scarce enough to sustain a price floor above €80 — and keeps financial traders in the game.