The European carbon market showed signs of stabilization heading into the weekend, with the Dec’26 EUA contract settling on Friday at €71.67. The contract posted only a marginal increase of €0.02 from the previous close, with a daily range of just €1.36, the lowest in three weeks.

However, carbon “has increased gradually over the last several sessions, and has managed to win back some of the ground lost during the continuous price falls over the previous few months,” as noted by Mind Energy, with EUAs posting a substantial 5.92% weekly gain compared to the previous Friday—the strongest rise in almost two years.

In early trading on Monday morning, the EUA Dec’26 briefly jumped to €73.97, the highest intraday level in more than two weeks, after Bloomberg reported that “the European Union plans to keep key parameters of its mechanism that controls supply in the carbon market unchanged when it makes a short-term revision to help contain high power prices.”

The European Commission is expected to propose changes to the Market Stability Reserve (MSR) on Wednesday. According to people familiar with the matter, the “removal of the invalidation provision will be the only change the EU will propose.”

Under current legislation, from 2023 onwards, any allowances held in the MSR on January 1 that exceed 400 million are permanently cancelled and removed from the market. If this rule were removed, those surplus allowances could instead remain in circulation and potentially flood the market.

However, “initial analysis suggests that removing the invalidation clause for future intake into the MSR in isolation is unlikely to materially depress EUA prices, with the broader impact dependent on accompanying policy adjustments,” BBVA analysts wrote this morning.