Vertis sees 14% EUA upside by year-end as ETS balance tightens
Tightening EU ETS supply could push Dec 26 EUA to €93 despite reform uncertainty cutting both ways.
The ICE Endex Dec 26 EUA contract settled at €81.38/t on Friday (2026-08-07), and advisory firm Vertis now expects a 14% rally to around €93/t by year-end on a tightening market balance.5
That call runs against a consensus that has turned decisively bearish on the bloc's carbon market. Analyst tracking compiled by EnergyReader shows six bearish signals against zero bullish weight, with reform risk dominating the tape.2
The European Commission's ETS reform package, unveiled on Friday (2026-07-17), triggered a 3% selloff in afternoon trading on Thursday (2026-07-16), with the Dec 26 contract dropping below the psychological €80/t mark. Traders described the move as "nervousness" ahead of the announcement rather than a considered repricing.5
The reform risk cuts both ways. Veyt senior analyst calculations from Wednesday (2026-05-20) suggest one adjustment under consideration could cut carbon prices by roughly 13% over the next two years, with auction volumes reduced by 24% when quotas exceed 833m tonnes. That is a supply-side shock that would push prices down, not up.1
But Energy Aspects sees the opposite dynamic emerging from next year. The launch of the EU's Industrial Decarbonisation Bank and the ETS investment booster scheme could inject more allowances into the market, which the consultancy said on Thursday (2026-05-21) is likely to dampen prices.2
Vertis is looking at a shorter window. The firm's year-end target implies the market is underpricing how quickly the balance tightens through Q4, when auction volumes taper and compliance demand firms up. That view has support in the volumes data.4
EEX handled 249.3m tonnes of EU carbon futures in the first half of the year, a 74% jump year on year, exchange data showed on Thursday (2026-07-09). The secondary market drove the growth, with EUA futures making up almost the entirety of the flow and only 1,000 tonnes of UKAs traded on the exchange.4
Those volumes remained modest next to ICE Endex, the dominant venue for European carbon. But the EEX surge signals growing appetite for hedging exposure to EUA price risk at a moment when the policy outlook is unusually clouded.4
The bearish consensus has deep roots. Analysts cut EU carbon price forecasts significantly in late April (2026-04-30), citing uncertainty over proposed policy changes and future supply levels. The prospect of US tariffs and weak industrial output weighed on expectations through mid-2025 as well, keeping forecasters conservative.6
Yet the market has been here before. The 3% drop on Thursday (2026-07-16) came from an already-depressed base, with the Dec 26 contract having priced in a substantial reform discount. If the commission's package lands lighter than feared, the short-covering potential is significant.5
One further supply factor bears watching. The EEX has confirmed it will stop auctioning carbon allowances to fund the REPowerEU programme once the €20bn target is hit, removing a steady stream of supply from the market. The timing of that threshold matters for the Q4 balance.3
The reform package details released on Friday (2026-07-17) will set the direction. A 13% downside scenario from Veyt and a 14% upside call from Vertis can both be right at different horizons; the question is which adjustment the commission actually proposes and when it takes effect.1
Traders watching the Dec 26 contract should focus on the auction calendar through September. If REPowerEU sales slow and the reform text preserves the current tightening trajectory, the €81 level starts to look cheap against the year-end strip. If the commission opts for the aggressive quota adjustment Veyt flagged, €81 may be the top of the range.3,1