Despite a brief rebound at the beginning of the week, the European carbon market failed to sustain upward momentum, trading sideways for the remainder of the week and closing on Friday at €80.28, down a marginal 0.37% on the week.

Throughout the week, EUA prices remained confined to a narrow €2.34 trading range, fluctuating between €79.90 and €82.24. Weekly trading volume totaled 107.5 million allowances, up 5% from the previous week but still well below the twelve-month weekly average of approximately 142 million allowances, pointing to subdued market participation.

A number of traditionally supportive catalysts—including the severe heatwave across Western Europe, temporary French nuclear reactor outages, and expectations surrounding the reopening of the Strait of Hormuz—failed to generate a sustained price response, with the market largely looking through these developments.

The lack of meaningful price action reflected a wait-and-see approach among market participants. As Mind Energy noted, “all eyes are now on the upcoming ETS reform proposal, which the European Commission is expected to publish in July,” with traders preferring to delay significant positioning until greater clarity emerges.

While enhancing industrial competitiveness remains a key political objective, there is little evidence to suggest that policymakers are considering structural changes to the EU ETS that would materially alter market fundamentals or trigger a significant repricing of EUAs.

In the near term, carbon prices are likely to remain range-bound around current levels. Weather developments and headlines or rumors related to the reform process could still trigger moves in either direction. On Monday morning, Montel reported that French utility EDF had cut 10.4% of its nuclear generation capacity, equivalent to 6.5 GW. Although temperatures are expected to ease by mid-week, we do not expect the eventual return to normal conditions to provide a meaningful catalyst for EUA prices.