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EU carbon market surplus keeps prices in check

The surplus in the EU carbon market dampened incentives to decarbonise in 2024, and the likelihood that the surplus is maintained until 2027 will keep a lid on carbon prices in the near term. Further ahead, a sharp contraction in the supply of carbon permits is set to drive prices higher but there is a risk that, amid mounting political pushback, carbon pricing policy is diluted to keep carbon costs in check.  

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