European carbon prices lost ground each day last week to close on Friday with a significant 14% weekly fall. During the last session, the EUAs reached their lowest since October 2022 before settling at €65,81.

Early Monday, carbon continues to decline, reaching briefly another 15-month low.  “The market is in what appears as freefall at the moment,” stated Danish electricity trader Energi Danmark in a note released this morning. The price now has lost almost 15€ compared to its highest level this year, which was reached in the first trading session on January 2.

Last Friday was busier than usual, with 30,2 million allowances changing hands, well above this year’s daily average of 20,3 million allowances. Also noticeable was the fact that the carbon market failed to respond to the bullish signals from the fuel markets.

Both coal and gas prices saw a rare bullish session on Friday mainly due to colder weather forecasts and rising concerns about a wider conflict in the Middle East. TTF front month closed the day with a 4% rise while coal prices mirrored the gains seen for gas.

The week could continue with falling prices for carbon, first and foremost because of the resumption of daily auctions. “Market participants await the restart of daily allowance auctions on 15 January”, anticipated on Friday Yan Qin, lead analyst in London Stock Exchange Group.

According to the EEX calendar, more than 13 million allowances will be auctioned this week.  The volume is more than 13% higher than a year ago, amid additional supply for the RePowerEU objectives and the inclusion of maritime transport in the EU ETS.