Welcome to “10 Minutes About” from Global Risk Management. Chief Analyst Arne Lohmann Rasmussen and Product Owner Liesa Maria Enzi discuss key trends in the EUA market and their broader impacts.
They examine the close link between EUA prices and gas prices. When gas prices rise, power producers often switch to coal, increasing EUA demand due to higher emissions—while lower gas prices drive the opposite effect. They also discuss how rising renewable energy use is decreasing fossil fuel reliance, potentially leading to an over-supply of EUAs and downward price pressure as companies may end up with excess allowances.
Lastly, Arne explains structural shifts, such as the annual Linear Reduction Factor which controls EUA supply, the upcoming Carbon Border Adjustment Mechanism to level competition on imports, and the inclusion of the maritime sector in the EUA system.
