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Carbon price not out of the woods yet

This Update marks the launch of our EU carbon price forecasts and coverage, including an in-depth mini-series on key market and price dynamics, and an accompanying dashboard to track market drivers.

Given our view that the demand for carbon permits will fall more slowly than supply over the rest of this decade, the market fundamentals are consistent with the EU carbon price rising to a record high of over €140 per tonne by 2030. However, prices will not rise in a linear fashion; in fact, as we explain in this note, we forecast the price to fall by a further 25% by mid-2024, to a trough of about €40, and that we will only start to see meaningful gains during 2025.

We will be discussing the near to long-term outlook for the EU carbon price in a 20-minute online briefing at 3pm GMT on Thursday 7th March. (Register here.)

In view of the wider interest, we are also making this Energy Update available to clients of our Climate Economics, Commodities Overview, Metals and Europe services.

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