ETS2 Marks Trading Debut with December 2028 Futures Contract
The European Union’s second emissions trading system, EU ETS II, has officially taken its first steps into the carbon market, with the first trade of a December 2028 futures contract taking place yesterday on ICE. The trade settled at €73.57 per tonne of CO₂, a figure well below the €91/t average price forecasted by analysts for 2028 but €19 above the European Commission’s reference level of €55/t.
Despite the initial excitement, trading volume was low following the first transaction, with market participants appearing cautious. The bid-ask spread remained wide, with bids around €75 and asks near €90 for most of the day.
The new ETS2, which will cover approximately 38% of the EU’s greenhouse gas emissions—primarily from road transport and buildings—will officially begin in 2027, though its launch may be delayed by a year if energy prices remain too high. The early availability of futures contracts is designed to improve price transparency and allow regulated entities to hedge exposure, yet the low volume and wide spreads reflect ongoing uncertainty about the market’s future structure and regulatory landscape.
In total, five lots were traded, equal to 5,000 emission permits. Futures for 2029 and 2030 were priced at €96/t and €100/t, signaling longer-term expectations that align more closely with analysts’ projections.
From a cost perspective, the current carbon price would translate into:
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€15/MWh increase in natural gas prices
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€0.17/litre more for petrol
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€0.20/litre added to diesel
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€0.12/litre for LPG
Beyond compliance and trading dynamics, the ETS2 has a critical social dimension. At current price levels, revenues from the scheme could exceed €300 billion in its first phase, with funding directed toward the EU Social Climate Fund—aimed at helping low-income households and small businesses transition to cleaner energy.
As the market matures, these early price signals will be instrumental in shaping expectations, informing investment decisions, and guiding EU climate policy implementation.
This article is intended for informational purposes only and should not be considered financial advice. The projections and scenarios presented are based on historical data and policy frameworks to approximate possible market evolutions. Market conditions may change due to unforeseen economic, regulatory, and technological factors. Readers should conduct their own research and consult with professional advisors before making any investment or trading decisions.