The European carbon market got off to a weak start in September, with prices briefly falling below €82 during the morning session as the sharp rise in energy costs fuelled broader concerns over the European economic outlook.

The market recovered as the session progressed, however, with the EUA Dec’26 contract reversing its early losses to end Tuesday at €83.34, up €0.24 on the day. The settlement marked its highest close in a week and extended gains to a third consecutive session.

Trading activity also picked up on Tuesday, with nearly 24 million allowances changing hands, the highest volume in six weeks and well above August’s daily average of 15.5 million, suggesting renewed market interest following the quieter summer trading period.

The situation across energy-related markets, meanwhile, continues to deteriorate. With gas prices hitting multi-year highs, pressure is also mounting in the German power market, where 2027 forward prices were “closing at 119.90 EUR/MWh, the highest level since January 2023” according to Mind Energy.

The upward trend in energy markets continued into early Wednesday, with TTF front-month prices “broking above €75/MWh for the first time since the start of the war in February, reaching its highest level since early 2023, as energy companies grow increasingly anxious about heading into winter with scarce stores for colder weather” as stated by the Financial Times.

Against this turbulent energy backdrop, the European carbon market has remained relatively calm, caught between competing fundamentals. On the one hand, soaring gas prices raise the prospect of increased coal-fired generation, potentially boosting demand for allowances from the power sector. On the other, a subdued industrial outlook and concerns over the broader European economy continue to weigh on expectations for emissions and EUA demand.