Following a strong rally that pushed prices to a nine-month peak on Tuesday, the European carbon market eased on Wednesday, with the benchmark EUA Dec’25 contract ending 1% lower and erasing part of the recent sharp gains.

The decline was likely driven by the deal reached in Brussels in the early hours of Wednesday by EU environment ministers, which several media outlets described as including “major concessions” that water down the bloc’s climate ambitions.

The agreement sets a new target of a 90% reduction in emissions compared with 1990 levels, described by the Council in its press release as “a crucial step towards the EU’s long-term goal of achieving climate neutrality by 2050.”

However, the document introduces three flexibility options for meeting the goal, including “the possibility to use high-quality international carbon credits to make an ‘adequate contribution’ towards the 2040 target, quantified as up to 5% of 1990 EU net emissions, from 2036 onwards, including a pilot period for 2031–2035.”

“One step forward, two steps backward: salvaging the EU’s 2040 climate target came at the cost of allowing EU member states and industry to emit more greenhouse gases,” said Sam Van den Plas, Policy Director at Carbon Market Watch.

Climate non-governmental organizations also criticized the one-year delay in implementing EU ETS 2. According to the International Emissions Trading Association (IETA), the decision “undermines market certainty and creates unnecessary disruption.”

European carbon prices eased further on Thursday as traders continued to digest the EU’s scaled-back climate targets, which have triggered caution among market participants.