In the context of the upcoming European elections, the idea of market intervention in the EU ETS starts to gain momentum, as a reactionary emotional response to falling carbon prices, with green policymakers leading the way.

Green lawmaker Michael Bloss is urging the EU to take measures. “As long as prices are between 50 and 100 euros per ton, the necessary investments for the switch to hydrogen are missing,” he told reporters for an article published by Der Spiegel this week entitled “Getting dirty is worth it again.” Furthermore, he advocated on his Linkedin page the idea of “introducing a minimum price for pollution certificates during the revision of the emissions trading system”

Similar ideas were shared by experts recommending that “the EU establish a kind of climate central bank that is based on a long-term corridor of maximum and minimum prices – similar to what the European Central Bank’s monetary authorities do with their inflation target”, wrote Der Spiegel.

However, not all market participants show concerns. “The European Commission is not too worried about the tumbling price of carbon allowances,” said Kurt Vandenberghe, director-general of DG CLIMA, at a virtual event in February, according to Carbon Pulse, when carbon prices stood at around the same level as today.

From our point of view, the current price level is not the result of a design flaw in the EU ETS, but rather it reflects the supply and demand factors. Demand for allowances is reduced due to the postponed compliance deadline to September and emissions decline amid higher renewables while supply is increasing amid the REPowerEU sales.

“We don’t want to meddle into the system and get unintended effects that would harm a market-based mechanism and its predictability in the longer term,” center-left MEP Jytte Guteland told a EURACTIV two years ago in response to Poland and Spain urging for demand action against speculations on the EU ETS.

“As a market observer, my wish is to not shift between headlines of ‘speculators drive price UP’ and ‘need price floor to tackle price,” said Yan Qin, lead analyst at Refinitiv, adding that “we shall not focus too much on short-term movements, such as ‘speculators driving EUETS price to €100.”

Furthermore, unlike previous elections, recent polls indicate that the climate change topic is generating less interest among voters faced with other worries. 

“The 2024 European Parliament elections will see a major shift to the right in many countries, with populist radical right parties gaining votes and seats across the EU, and center-left and green parties losing votes and seats,” according to an analysis published in January by the European Council on Foreign Relations (ECFR).