Carbon prices in the EU will rise sharply by 2027 – analysts

The average forecast price for 2027 was €111.14/t

Analysts expect carbon prices in the EU to rise by 2027 as supply declines due to policy measures. This is evidenced by the quarterly Reuters survey.

The average forecast for the carbon price in 2027 was €111.14/t (current price is €62.50/t). This is the first time the survey participants were asked about this period.

Hage Fjellheim, Head of Carbon Analysis at Veyt, believes that 2027 will be a very busy year, with market participants increasingly focused on the upcoming reduction in supply.

According to him, against the backdrop of the European Commission’s Fit for 55 program, which reduces the supply of new allowances, the market stability reserve continues to absorb the surplus remaining on the market. The program aims to reduce net greenhouse gas emissions in the EU by 55% by 2030 compared to 1990 levels.

At the same time, analysts have hardly changed their forecasts for 2025 and 2026. In 2025, the EUA price is expected to average €76.88/t, and in 2026 – €92.48. This forecast is 0.2% and 1% higher, respectively, compared to the July forecast.

According to David Oxley, chief climate and commodities economist at Capital Economics, in the short term, carbon credits are likely to continue to trade in a wide range in line with EU gas prices. Over time, however, the link will weaken as industry takes over as the key contributor to energy emissions.

As GMK Center reported earlier, the gradual phasing out of free allocation of allowances under the EU ETS, along with a reduction in the emissions cap, could raise the European carbon price to €249/t by 2034, according to the British consulting company Redshaw Advisors. More than 4,000 large companies, which account for about 40% of EU emissions, are constantly making efforts to decarbonize in preparation for this.