The European carbon market was broadly steady on Friday, with the EUA Dec’25 contract settling at €83.79, down 0.13%, after briefly touching €84.40—its highest intraday level since January. Trading volumes were notably light, with just 20.5 million allowances exchanged, the lowest level seen since late October.

Meanwhile, carbon prices remained largely detached from movements in the European gas market. The TTF front-month contract jumped 3.28% on Friday, its strongest daily gain since early June, marking a sharp rebound after recent steep price declines.

“Following a very long, mild period, the weather forecasts now suggest that temperatures in Central and Western Europe will drop to around or slightly below the seasonal average from Christmas,” writes Mind Energy this morning. In addition, wind output is expected to decline in the coming week, reinforcing the bullish outlook for both gas and carbon prices.

According to Climate Market Now, the disconnection between gas and carbon markets is due to “a growing appreciation among speculative investors that the so-called fuel-switching price between coal and gas—which has been a reliable proxy for the fair value of EUAs since the inception of the EU ETS 20 years ago—is increasingly irrelevant for EUA pricing.”

Market participants are instead focusing on the upcoming auction pause. Monday will see the final auction of the year, with the first sale of the new year scheduled for January 7. In total, 532.3 million allowances are set to be auctioned next year, roughly 10% fewer than in 2025.