EU CO2 allowance prices fell sharply in late January on a combination of mild temperatures in Europe, cheap natural gas prices, and an expected increase in primary supply from the UK this year, following Brexit. EU Allowance, or EUA, futures contracts for December 2020 delivery on the ICE Futures Europe exchange fell as low as Eur22.90/mt ($25.29/mt) by February 4 -– the lowest price since early October 2019. A mild winter so far this year has exerted downward pressure on the energy complex due to lower-than-normal heating demand, while cheap natural gas prices was keeping the cleaner fuel relatively competitive against more emissions-intensive coal for power generation.
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