- The aggressive linear reduction rate (LRR) of 4.2% to eliminate allowances by 2040 may be just too ambitious and leave a significant supply-demand gap that is challenging to be filled.
- The efforts to improve energy security will increase fuel combustion activities at least over the short-term, hence putting greater carbon pricing pressure if the number of allowances for such use.
- With existing pace of EU renewable energy adoption, carbon price will only go higher as there is no choice but to be more carbon-intensive to support EU’s energy need without.
- As flight activity rebounds, it will be another source of potential upside when emissions rise, and allowances remain and reduce from current levels.
- The introduction of CBAM and inclusion of maritime are the must-watch that will further increase carbon allowance demand.
For further details see:
KRBN: Short-Term Carbon Demand Surge With Long-Term Supply Squeeze