EUA prices firmed through August as attention shifted towards winter fundamentals, with TTF the primary short‑term driver. Rising gas prices and low storage levels supported forward power‑sector hedging and coal‑to‑gas switching economics, giving carbon a bullish backdrop. Persistent heat and drought added demand through higher power consumption and reduced hydro availability. Thin summer liquidity amplified moves, leaving the market sensitive to energy prices and positioning. Structural policy remained a secondary driver, as participants assessed the European Commission’s July ETS reform proposals for future allowance supply, the MSR and free allocation, while geopolitical and LNG supply risks indirectly underpinned EUA valuations. EUAs finished the month at €83.10, up 2.21% from July.
UKA prices were broadly range‑bound, influenced by UK gas and power fundamentals and continued convergence with EUA prices. Higher gas prices lent some support via weaker clean‑spark economics, while subdued summer demand and strong renewables limited near‑term compliance demand. The inclusion of domestic maritime emissions in the UK ETS from July added a structural source of allowance demand, and tighter free allocation reinforced the longer‑term supply outlook. EUA–UKA convergence, UK energy fundamentals and a tightening supply‑demand balance should remain the key drivers into September. UKAs closed August at £59.09, up 0.51% month‑on‑month.
CCA prices strengthened through August on firm compliance demand and improving regulatory visibility. The key catalyst was the August California–Quebec joint auction, which cleared at $32.48/t, up $3.67/t or 12.7% from May, marking a fifth consecutive sold‑out auction. Confidence grew after CARB finalised its Cap‑and‑Invest programme amendments in May, while the California–Washington–Quebec linkage agreement added a structural bullish signal. Expectations of a tightening supply‑demand balance remained supportive, with California power and gas fundamentals shaping marginal demand. CCAs closed the month at $33.82, up 3.22% from July’s close.
The Regional Greenhouse Gas Initiative (RGGI) market closed the month slightly down, driven primarily by the 72nd quarterly allowance auction, which cleared at a record US$35.00/tCO₂ on robust compliance demand. Sentiment was further buoyed by expectations of higher future demand following Virginia’s return to the programme and growing regional electricity consumption, particularly from data centres. RGGIs finished June at $43.80, down 0.87% month‑on‑month.
RGGI prices remained supported in August despite trading well below earlier‑year levels, as the summer lull drained volatility. News in July of an additional 3.5 million allowances at the September auction and 2.2 million in December helped cap prices, while the absence of regulatory news left the market without new drivers. RGGIs finished August at $40.90, up 5.67% month‑on‑month.
The Greenedge Carbon Allowances Absolute Return AMC recorded a 1.98% performance for August. EUA and UKA prices remain supported by strong fundamentals and summer energy demand. Funds remain under‑exposed to EUAs compared with previous years, and the onset of winter provides an opportunity for financial participants to re‑engage. In the US, CCAs and RGGIs are supported as regulatory issues subside and investors regain confidence in the market structure.
