In the next month, we forecast carbon prices to gradually move lower driven by strong hydro output and low energy demand.
Strong hydro output will depress carbon price this month
Hydro generation has been strong in Europe and we expect it to be a key driver of EUA demand in the next four weeks. Solar and wind generation will have a neutral impact carbon price during the next month.
Fossil fuels will have limited impact on EUA demand in September
Shifts in gas price due to international events have led to narrow the gas:coal price margin, which encouraged some gas-to-coal shifting, which puts some marginal pressure on EUA demand. However, CRU expects prices to relax in the upcoming weeks. This will have little to no impact on carbon price.
Nuclear output will remain below average
Nuclear output utilisation in France remained below average in August and this trend will continue in September as power demand struggles in Europe. Nuclear output will have no impact on the EUA demand.
Low industrial power demand persists in September
Economic slowdown will continue in September, as industrial output struggles and prices keep falling. This reduces industrial energy demand in Europe and put a downward pressure on EUA demand. As governments are on summer holiday in August, there are no significant policy development impacting the EUA price.
If you want to hear more about our short-, medium- or long-term carbon price forecasts produced as part of CRU’s Sustainability and Emissions service, please email us at sales@crugroup.com, we’d be happy to discuss this with you.
The cut-off date of the data is 21 August 2023.
These and other economic developments that impact commodity markets are discussed with CRU subscribers regularly. To enquire about CRU services or to discuss this topic in detail, get in touch with us.
CRU experts discussed the impact of the war in Ukraine on commodity markets in a recent webinar. Experts from all major commodity areas joined CRU’s Head of Economics and an energy specialist to discuss markets one month on from the invasion of Ukraine. The webinar is available to watch on-demand here.
