Experts Predict Slower Rise in Europe's Carbon Prices After Market Reform Plans

Europe's carbon market is called the Emissions Trading System, or ETS. Under this system, factories, power plants, and airlines must buy a permit — called an allowance — for every ton of carbon dioxide, or CO2, they release into the air. The idea is that the more a company pollutes, the more it has to pay. This gives businesses a strong reason to find cleaner ways to make energy and products.

A survey of nine analysts found that the average price for these allowances is now expected to be about €80 per metric ton in 2026 and about €89 per metric ton in 2027. Those numbers are a little lower than what analysts predicted back in April, when they expected prices of about €81 in 2026 and €93 in 2027. Right now, the price for one allowance is trading at around €82 per ton.

On July 17, the European Commission put forward a plan to update the ETS rules. The plan would let industries keep releasing CO2 for a longer period of time while also giving them more money to help them switch to cleaner technologies. Analyst Noemi Zuercher from the research firm Rystad explained the main reason prices are expected to rise more slowly. She said it is because the proposed rules would reduce the number of available allowances at a slower rate than before, meaning there would be more supply in the market.

Looking further into the future, analysts actually raised their price forecast for 2028 by 2%, expecting allowances to reach about €95 per ton. Analyst Yehor Melakh from Clear Blue said this is because a special group of extra allowances — called 'investment booster' allowances — is now expected to be sold off more gradually than previously thought. When fewer allowances flood the market at once, prices tend to stay higher. This means the market could be stronger in 2028 than earlier predictions suggested.

The European Commission also plans to sell 400 million allowances into a special fund called an 'investor booster fund.' The goal is to raise around €30 billion, which would be used to help industries invest in clean technology. Analysts also shared their first-ever price forecasts for 2029 and 2030. They expect prices to reach about €100 per ton in 2029 and about €109 per ton in 2030, showing a steady climb as Europe pushes harder to cut pollution over the coming years.