The ETS Compliance Challenge - The influence of trader behaviour

As we move into 2026, many companies will be reviewing their ETS purchasing strategy for this year and trying to make sense of what is next for EUA prices.

A 20% rally for EUA prices over 2025 was perhaps in line with expectations at the start of the year but that was before EUAs dropped to a low near €60 in April 2025 after the Trump Tariff War dominated global markets.

After a rangebound summer where benchmark EUAs seemed stuck between €70-75, it has been the price activity since September that has caused some surprise and highlights how the EU carbon market is becoming increasingly driven by trader behaviour.

This is highlighted by a carbon price poll of 16 analysts in July 2025 which showed an average price of €74.95 for the final quarter of 2025, significantly below the €87 level where the benchmark EUA contract ended the year.

It cited near term bearish fundamental drivers including “high auction volumes, weak industrial demand, and strong renewable generation” as reasons for limited EUA price increases.

To try and understand why the analysts were so wrong, we need to look at the increasing impact and influence of traders and investors on the carbon market and how fundamental drivers (which analysts tend to focus on) are becoming less relevant for price discovery in the short term.

As of the latest Commitment of Traders report (7th Jan 2026), investment funds held a massive long position of 143m and the number of funds active in the EU carbon market continues to grow – now over 500 funds.

This influx of traders jumping on the carbon bull story (some perhaps simply due to FOMO) and building ever bigger long positions pushed EUAs through €80 by October, €85 by December and now have €90 in their sights.

So, what does this mean for compliance buyers looking to decide when to purchase EU Allowances?

EUA prices driven by a fundamental outlook are much easier to plan for, a steady price movement allows companies to set budgets and employ a basic purchasing strategy.

A volatile, unpredictable market where traders dominate the short-term view, presents challenges to put in place the right strategy and execute allowance purchases effectively.

As one of the most active traders in the carbon markets, CFP Energy can help operators develop smarter compliance strategies to manage these new risks.

Get in touch with our award-winning team for instant support, here.