On 7 October 2024, the European Securities and Markets Authority (ESMA) issued its first EU carbon markets report.

The report provides details and insights into the functioning of the EU Emissions Trading System (EU ETS) market.

It has four key sections covering prices and volatility, auctions, secondary markets trading and derivatives market positions.

Key findings

Key findings in the report include:

  • Prices in the EU ETS have declined since the beginning of 2023.
  • Emission allowance auctions remain significantly concentrated, with 10 participants buying 90% of auctioned volumes.
  • The vast majority of emission allowance trading in secondary markets takes place through derivatives.

Policy recommendations

The report does not identify major new policy issues.

It does, however, note that in the context of the MiFIR review, ESMA will consult on the revision of regulatory technical standard (RTS) 22 for improving the reporting of transaction data. The report notes that the identification of transaction chains remains problematic, and trading strategies were subject to price adjustments to perform more accurate analysis. The consultation will therefore also seek advice from the industry as to whether there is the need to further clarify the reporting of strategies and transaction chains. Following this revision, ESMA invites the European Commission to duly consider transaction chains when adopting the revised RTS 22, given the implication it will have also for carbon markets.

Next steps

The report will be produced annually as per ESMA’s mandate.

ESMA will host a webinar to present the main findings of the report on 24 October, 10:00 – 10:45 CET. Registration for the webinar is here.