The European carbon market rally lost momentum on Thursday, with EUAs closing at €75.54 after a 2.02% drop — the steepest in six weeks — wiping out all of last week’s gains.

The market reacted to Bloomberg reports that Germany is pushing for a slower phase-out of free allocations amid CBAM implementation, a bearish signal for EUAs. “We must extend the free allocation; otherwise, we will lose essential industries in our country,’ Economy Minister Katherina Reiche said at a business meeting on Wednesday night.

The European gas market saw an even sharper drop in yesterday’s trading, with the TTF front-month contract falling 2.41% after news that the EU will stick to its 2028 deadline for phasing out Russian oil and gas imports, despite U.S. pressure to accelerate the timeline.

In her State of the Union address to the European Parliament on Wednesday, EU Commission President Ursula von der Leyen said the bloc is “particularly looking at phasing out Russian fossil fuels faster.”

However, Reuters reported that after a meeting with U.S. Energy Secretary Chris Wright on Thursday, EU Energy Commissioner Dan Jorgensen confirmed the EU will maintain its 2028 deadline for ending Russian energy imports.