According to Global Carbon Market Outlook 2024 published last week by BloombergNEF, carbon prices in the European market would average €71 ($76) in 2024, dropping from the average of €85 recorded in 2023.

Last year was a challenging one for EU ETS, despite reaching their highest settlement above €100 in February. The EUAs have since traded downwards as the “recession risks and cost inflation have taken a toll on European industrials, lowering their activity, emissions, and demand for carbon allowances,” says the report adding that “declining power sector emissions also limited demand for allowances.”

Earlier this year, BloombergNEF also pointed out in a report entitled “Ten Things to Watch in Global Carbon Markets in 2024” that including maritime emissions in the EU ETS combined with additional allowances due to REPowerEU plan, “will see the market oversupply in 2024-2025, before shifting to a deficit of allowances from 2026 onwards.”

In contrast to the bearish trend in the EU ETS, reforms across other regional carbon markets such as the US and Australia would boost prices in the short term. California’s carbon price is expected to average from $34 last year to $42 in 2024 and $46 in 2025.

However, in the long run, Bloomberg NEF forecasts the average carbon price in the EU ETS to reach around €149 by 2030 while in California, prices “could reach as high as $93 by the end of the decade.”