EU ETS in pricing ‘no man’s land’

At a recent conference in Florence, analysts pointed out that the carbon market now sits “in no man’s land,” caught between fading utility-based hedging and emerging industrial demand.

Stefan Feuchtinger, Head of Market Research & Analysis at Vertis, observed that while utilities have historically anchored carbon pricing, their hedging activity is much reduced today. He expects the carbon market to stay influenced by power sector dynamics until approximately 2026–27, at which point industrial forces may begin to assert greater pricing power.

• Beyond this shift in price leadership, the article raises critical questions:
• What happens when industrial emitters become the primary price setters?
• Can carbon capture and storage reshape cost structures and expectations?
• What price levels will incentivize meaningful decarbonisation in heavy industry?

In this article, we’ll unpack these themes, explain how this “in-between” state affects regulated entities, and suggest how companies can position themselves as the carbon market’s balance of power evolves.

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