The latest forecasts published by BloombergNEF for the fourth phase of the EU ETS “reflects a dampened outlook for near-term power sector emissions and the latest proposals for front-loading allowance supply to raise money for the REPowerEU.”

According to the analysis, carbon prices would average €93 in 2024 rising to €98 in 2025 before reaching €149 in the second half of the decade. The average price for the fourth phase is estimated at €104, lower than €108, the previous estimates made six months ago.

BloombergNEF estimates that the target for raising €20 billion for REPowerEU purposes by auctioning allowances under the EU ETS, “to be reached before the full amount of allowances set out in draft amendments for the plan is auctioned, exacerbating the bearish near-term effect of this measure.”

According to the Commission, by 1 September 2023, almost €1 billion had been raised “auctioning 5.88 million allowances from the Innovation Fund and 4.98 allowances from the Member States’ ETS allowances.” The amount is considerable considering that the auctioning started on 3 July 2023.

BloombergNEF also warns about the risks associated with the gas market considering the reduced Russian deliveries. “Any market jitters that reverse the economics of power generation in favor of more emissions-intensive coal, or cold weather that ends persistent gas demand reduction could boost emissions and, in turn, allowance prices and demand.”