20 May 2026
EU ETS 2026: At the beginning of May 2026, the price of EUA allowances was around EUR 75/tCO₂, with a level of approximately EUR 75.20/tCO₂ on 8 May. In the second half of the month, the price remained in the same range, at approximately EUR 74.7–75.7/tCO₂, indicating more of a temporary stabilisation than a firm market recovery.
Compared with the beginning of the month, the variation is limited. However, EU ETS market volatility remains relevant: the EUA price has not fallen back towards the spring lows, but it has not confirmed a clear upward trend either.
For companies regulated under the EU ETS, the message is clear: the current carbon price is not low, and compliance risks must continue to be assessed in operational budgets and investment plans.
Compliance risks must continue to be assessed in operational budgets and investment plans.
Why the EUA price remains volatile in 2026
The recovery of the EUA price to around EUR 75/tCO₂ should not be interpreted as a full stabilisation of the market. The price of EUA allowances remains influenced by three main factors:
- natural gas and electricity prices, which affect demand for allowances from the power sector;
- the level of industrial activity, especially in energy-intensive industries;
- political and regulatory risk, as the market awaits further clarity on the post-2030 EU ETS reform.
Reuters recently reported that analysts have lowered their forecasts for EUA prices in 2026 and 2027, due to political uncertainty and the risk of changes to the EU ETS architecture. The average estimate for 2026 was reduced to approximately EUR 80.61/tCO₂, while the estimate for 2027 was lowered to around EUR 93.29/tCO₂.
This revision shows that the carbon market remains sensitive not only to energy and industrial factors, but also to political signals regarding the future direction of European climate legislation.
TNAC and the Market Stability Reserve: key indicators for the EU ETS 2026 market
A key element to monitor in May is the publication of the TNAC – Total Number of Allowances in Circulation. The European Commission announced that it would publish, on 29 May 2026, the surplus of allowances in circulation in the EU ETS market for 2025.
The TNAC indicator is important because it determines the functioning of the Market Stability Reserve, the mechanism through which part of the EUA allowances may be withdrawn from auction volumes or released into the market.
Therefore, TNAC directly influences the supply of available allowances and may have an impact on the EUA price. For EU ETS operators, this indicator should be actively monitored, as it may affect compliance budgets and allowance procurement strategies.
What the EUA price means for EU ETS companies
For industrial operators, May 2026 is a relevant period for updating EU ETS compliance budgets. Companies should verify:
- how many EUA allowances need to be purchased for emissions compliance;
- whether they have price exposure through energy, fuel or production contracts;
- whether their EUA procurement strategy is phased or excessively dependent on short-term purchases;
- whether emissions reduction projects are still economically justified at an EUA price of EUR 70–80/tCO₂;
- whether possible changes to free allocation may affect medium-term costs.
For exposed industries, the risk is not only the current EUA price, but also the direction of regulation in the coming years. Companies that treat the EU ETS merely as an annual compliance obligation may miss its real impact on costs, investments and competitiveness.
Regulation (EU) 2026/667 and the new 2040 climate target
The most important legislative document of this period is Regulation (EU) 2026/667, which amends the European Climate Law, namely Regulation (EU) 2021/1119. The Regulation establishes a binding climate target for 2040: a reduction of net greenhouse gas emissions by 90% compared with 1990 levels.
This target is not merely a political statement. It will form the basis for the revision of European climate legislation after 2030, including the EU ETS.
The Regulation provides that relevant Union legislation will need to be reviewed in order to enable the achievement of the 2040 climate target and climate neutrality by 2050.
How the 2040 target may influence the EU ETS reform
Regulation (EU) 2026/667 refers to several important directions for future European climate reforms:
- revision of the EU ETS trajectory;
- possible integration of permanent carbon removals, including carbon removals, into the EU ETS;
- limited use of high-quality international carbon credits in the post-2030 period;
- a possible more gradual approach to phasing out free allocation;
- protection of European industry against the risk of carbon leakage;
- maintaining industrial competitiveness while reducing emissions.
A particularly relevant aspect for the voluntary carbon market is that the Regulation allows for the assessment of a contribution from high-quality international carbon credits, based on Article 6 of the Paris Agreement.
The text refers to the possibility of a pilot period in 2031–2035 and the use of international credits from 2036, within strict limits and subject to criteria related to integrity, additionality, permanence, avoidance of double counting and robust MRV.
What the 2040 climate target means for companies
For companies, Regulation (EU) 2026/667 sends a clear signal: decarbonisation remains the structural direction of the European economy.
Even if the European Union introduces more flexibility in certain mechanisms, the cost of carbon and emissions reporting requirements will continue to influence:
- investments in energy efficiency;
- electrification of industrial processes;
- procurement of renewable energy;
- use of alternative fuels;
- carbon capture, storage or removal projects;
- decarbonisation plans required by clients, investors and financiers.
Companies that treat the 2040 climate target as a distant risk will be unprepared. By contrast, companies that integrate it now into investment planning will be better positioned to manage future carbon costs.
Recommendations for companies regulated under the EU ETS
In the coming months, companies covered by the EU ETS should update their carbon risk assessment. In practical terms, it is recommended that they:
- update their internal EUA price forecast;
- verify their allowance position for the current year;
- analyse the impact of TNAC and the Market Stability Reserve;
- include price scenarios of EUR 70, 80, 90 and 100/tCO₂ in their budgets;
- monitor the post-2030 EU ETS reform;
- align decarbonisation investments with potential allowance savings.
EU ETS becomes a strategic risk, not just a compliance obligation
The evolution of the EUA price in May 2026 shows a market in a consolidation zone, but not one of real stability. The level of approximately EUR 75/tCO₂ remains high enough to influence industrial costs, but it does not yet fully reflect the pressure of the European 2040 climate target.
For companies regulated under the EU ETS, the main risk is not only short-term market volatility, but the structural direction of European legislation. The post-2030 EU ETS reform, the climate objective of a 90% reduction by 2040 and the possible integration of carbon removals or international credits will change how companies plan investments, energy procurement and decarbonisation strategies.
In this context, carbon management must be treated as a strategic component of competitiveness, not merely as an administrative obligation.