EU
The European Union Allowance (EUA) prices for January averaged at EUR 75.89 per tonne, up 11.31% from the previous month. Throughout the month, EUA prices exhibited a clear upward trend, peaking at EUR 79.75 per tonne in mid-January, the highest level recorded since 2024.
This price surge was primarily driven by a rebound in market demand, fueled by increased winter energy consumption and the tightening of emission regulations in the shipping sector. Additionally, as certain industries experienced a gradual reduction in carbon allowances, concerns over supply constraints intensified, further pushing prices higher.
However, the anticipated early auctioning of allowances to meet REPowerEU targets may limit the room for further price increases. Looking ahead to 2025, while supply is expected to remain strong, the demand side is projected to grow steadily due to the reduction in free allocations and the expansion of industry coverage. Overall, EUA prices are expected to experience a moderate recovery.
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China
The China Emission Allowance (CEA) prices for January averaged at RMB 95.39 per tonne, down 4.3% from the previous month. This decline was in line with market expectations following a drop in compliance-driven demand in the earlier period.
Despite this downward trend, CEA prices remained above RMB 94 per tonne, demonstrating resilience in market performance. On the demand side, starting this year, the steel, cement, and electrolytic aluminum industries have been integrated into China's national carbon market, which is expected to stimulate market demand.
Following the compliance period, market activity is likely to remain subdued for some time. Nevertheless, as China’s carbon market enters its fourth year, enterprises have gradually adapted to the market rules, and the government is expected to strengthen regulatory oversight and tighten emission requirements for industries. Looking ahead, CEA prices are projected to see a steady increase in 2025.