Markets & Policy Watch: EU ETS Steady-Soft as Gas Eases; Ministers Tee Up September Push on 2040 Target

Through August, EU Allowances (EUAs) largely oscillated within a tight range as lower gas price pressure and subdued summer demand kept power-sector hedging muted. Analyst surveys still peg the 2025 average near the mid-€70s/t, but short-term levels have tracked gas fundamentals and industrial output.

Against that backdrop, the political calendar looms: after the European Commission’s July proposal to cut net greenhouse-gas emissions by 90% by 2040—allowing a small share to be met via international credits—Member States are working toward a compromise text targeted for September. A deal would set the tone for ETS design choices later this decade (including interactions with ETS2 for buildings and road transport) and could influence auction trajectories and hedging behavior into winter.

For corporates, now is the moment to refresh abatement curves, revisit internal carbon prices, and consider layering voluntary removals (with strict quality criteria) alongside compliance strategies—especially if Brussels moves ahead with a dedicated purchaser for permanent removals. Near-term market watch-items: gas storage progress into October, industrial demand signals, and any Commission communications tied to the 2040 package that could shift expectations on future supply-demand balances.