After dipping below €80 in early Monday trading, the European carbon market rebounded, climbing to a two-week peak of €82.32 in early trading on Wednesday, even as gas and power markets posted significant declines.

Trading volume exceeded 45 million allowances on both Monday and Tuesday, well above this year’s daily average of 28.3 million. Although increased activity is typical for this time of year, with option expiry approaching in two weeks, the elevated volumes remain notable.

Also striking is the widening disconnect between gas and carbon markets. TTF front-month prices have fallen 7.67% over the past month and are down 37.08% compared to the same period last year, according to Trading Economics.

S&P Global notes that “the divergence has amplified since the start of Q2 this year. The correlation coefficient between the prices of both markets was 0.45 in 2024, and further strengthened to 0.91 in Q1 2025, before flipping to -0.41 from Q2 to date.”

Speculative traders are increasingly contributing to this shift as carbon allowances are treated more like financial assets. As a result, carbon prices are now driven primarily by long-term expectations of future scarcity rather than short-term operational factors such as natural gas prices.