The EU Emissions Trading System (ETS) carbon price has held above the €60/tCO₂ level since early January 2026, demonstrating structural market support despite intermittent political uncertainty around border carbon adjustment mechanisms.
Supply tightening under the Market Stability Reserve (MSR) has reduced the volume of allowances in circulation by approximately 800 Mt since 2019. Analysts expect further drawdowns in 2026–2027 as industrial free allocation continues to phase down.
Demand-side recovery in heavy industry — particularly cement, steel, and aluminium — has restored industrial demand for allowances to near-pre-pandemic levels.
Political risk remains a concern. Proposed extensions to free allocation for certain sectors, if enacted, could pressure prices downward. However, the market appears to be pricing in confidence that the overall ETS architecture remains robust.
The price trajectory is consequential for Turkey's own carbon pricing ambitions. The government has proposed a domestic ETS aligned with the EU scheme, though implementation timelines have been repeatedly deferred.