Dan-Bunkering Sees EUA Price Jumping Above EUR 100 Next Year

ICE EUA futures traded at EUR 81.50 on Wednesday, near their highest level since February. Image Credit: Ship & Bunker

Global marine fuels firm Dan-Bunkering expects to see the European Union Allowance (EUA) price for compliance with the bloc's emissions trading system to rise above EUR 100 ($116.27) next year.

A price above that level would be the highest seen since early 2023, when the EUA price briefly spiked above the EUR 100 mark.

The shipping industry has been a part of the EU-ETS since January 2024, requiring ships on voyages touching EU ports to buy EUAs to cover their GHG emissions. 

"Speculative investors remain heavily positioned for higher EUA prices," Dan-Bunkering said in a note to customers this week.

"The price reaction in October appears to support our view that investors have primarily positioned themselves for a tighter EU market over the next two years, and not a short-term move higher in the September 'compliance month'.

"If, as we expect, EUA prices exceed EUR 100/MT in 2026, the likelihood of some form of political intervention to ensure more manageable price levels will rise.

"Following the latest rally towards EUR 80 MT, short-term price risks now appear more balanced.

"We would expect the Dec-25 contract to see support at EUR 80 MT. We believe the market remains a 'buy on dips' market."

Prices Near Nine-Month High

ICE EUA futures traded at EUR 81.50 on Wednesday, near their highest level since February.

The EU-ETS is being gradually phased in for the shipping industry, with companies required to buy EUAs to cover only 40% of their GHG emissions in 2024, moving up to 70% in 2025 and 100% in 2026. Tank-to-wake GHG emission factors are also changing to start to take account of methane and nitrous oxide emissions from next year.

An EUA price of EUR 100 would add EUR 320/mt of EU-ETS compliance costs to every tonne of VLSFO consumption on an intra-EU voyage in 2026.

It should be noted that Dan-Bunkering has not said it expects an average EUA price above EUR 100 for the whole of next year, only that prices are expected to rise above that level at some point in the year.

The latest information from environmental market specialist Grey Epoch Europe* indicates the EUA price may average EUR 85/mtCO2e for 2026 as a whole. 

*Grey Epoch Europe Limited is an appointed representative of Thornbridge Investment Management LLP, which is authorised and regulated by the Financial Conduct Authority.