Although the current sentiment in some international carbon markets is bearish, global expectations for carbon prices and more ambitious government climate policies through to 2030 are bullish.1
European Union Allowances (EUA) spot price has largely recovered following the initial decline from the Russian-Ukraine conflict, with the spot price experiencing a gain of 17.9% in Q2 2022 (see Table 4.1). However, the EUA spot price remains volatile as Europe faces continued conflict, an energy crisis, fuel insecurity and changing carbon policy settings. In May, the European Commission released a proposal to auction off an additional 200-250 million EUAs from the Market Stability Reserve (MSR) to increase funding for their
REPowerEU Plan, which aims to reduce dependency on Russian fossil fuels.
On 29 June, the European Council adopted its general approaches to the
'Fit for 55' package aimed at reducing emissions by at least 55% by 2030 compared to 1990 levels. This included proposed legislative changes to the Emissions Trading System, the introduction of the Carbon Border Adjustment Mechanism and the establishment of a social climate fund to support vulnerable households and sectors.
The New Zealand Unit (NZU) spot price was relatively flat over Q2. Recent policy developments include a proposal to ban exotic forests from its Emissions Trading Scheme and the release of New Zealand's economy-wide
Emissions Reduction Plan. On 15 June 2022, New Zealand's second carbon allowance auction for the year took place, with the Cost Containment Reserve being exhausted.2 The auction cleared at NZ$76 and the government sold 6,131,700 units.
Korean Allowance Unit (KAU) spot prices were relatively stable throughout Q2 2022 before seeing a sharp decline in mid-June (see Figure 4.1). The KAU market is impacted by a substantial oversupply of KAUs as emissions are yet to return to pre-pandemic levels.
1 International Emissions Trading Association (IETA), IETA, 2022,
IETA GHG Market Sentiment Survey Report 2022
2 The Cost Containment Reserve is an instrument designed to ease demand pressure and act as a price ceiling in the New Zealand Emissions Trading System.
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