EU Carbon Prices Rise 7% in May Amid ETS Developments and ICE’s New Futures Launch

EU Carbon Prices Rebound on Policy Shifts and Market Volatility

EU carbon prices rose by 7% in May, driven by ETS unification talks and the launch of ETS2 futures.
The price of EU Allowance (EUA) contracts for December 2025 increased from €67.0/t to €71.6/t, peaking mid-month at €73.4/t. Market sentiment was shaped by fluctuating gas prices and major policy announcements from Brussels and London.

Meanwhile, ICE introduced the first futures for ETS2 — the upcoming carbon trading system covering buildings and road transport — at €73.57/t. This step marks a critical expansion of the European carbon market, set to take effect in 2027. The EEX will begin parallel trading in July.

UK Carbon Market Faces Headwinds While EU Pushes Ahead

UK carbon prices briefly rallied in mid-May before slipping again amid market uncertainty.
On May 19, the UK Allowance (UKA) December 2025 contract reached £55/t after news broke of ETS alignment with the EU. However, S&P Global forecasts a price dip toward £50/t in Q3, suggesting limited long-term momentum.

The proposed unification of the EU and UK ETS could streamline emissions tracking and eliminate CBAM-related trade frictions. It would cover industries including power generation, industrial heat, maritime transport, and aviation. However, geopolitical risk persists. US President Donald Trump’s late-May tariff threats on EU imports dampened carbon and commodity markets, pushing EUA prices down to €70.94/t by month’s end.

SuperMetalPrice Commentary:

The 7% rise in EU carbon prices shows that climate policy still holds weight in shaping commodity markets. The launch of ETS2 futures adds a new layer of complexity and opportunity, especially for industrial players preparing for 2027 regulations. However, political volatility—both from the US and within Europe—continues to inject uncertainty into pricing trajectories. Carbon-intensive sectors must now account for futures dynamics and international policy shifts as integral parts of their cost planning.