Understanding the RePower EU Hangover and the Political Road Ahead

Nov 25, 2025

EUAs have enjoyed a strong four-month rally with prices peaking at c€82. Investment funds now hold an estimated 97Mtin net long positions — the greatest length since 2021 — reflecting improved confidence in the structural tightness of the EU ETS. However, with speculative length elevated and liquidity thinner than usual, the market is more sensitive to policy headlines than fundamentals alone would suggest. A cluster of regulatory developments that are due shortly — draft CBAM rules, possible flexibility around the 2040 90% climate target, likely UK–EU ETS linkage, and the potential delay of ETS2 — may introduce short-term noise and sentiment-driven volatility, with price action periodically diverging from fundamentals.

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