Carbon's 'diamond hands' about to get tested once more

Long-term investors in the EU carbon market have developed a strong conviction that carbon prices must rise if the EU is to meet its decarbonisation targets. Over the past 18 months that conviction was rewarded as prices rose 3-fold towards the €80-€90 per tonne range we sit at currently.

Diamonds are borne out of carbon after being placed under intense heat and pressure for long periods of time. The ‘diamond hands’ of the carbon market remain of a strong conviction but have been noticeably quieter of late as carbon prices have settled towards the high range of what is ‘politically acceptable’ - and not marched higher towards, and beyond the €100 per tonne mark.

However, it’s an altogether different diamond that could dictate the direction of the EU carbon market over the next few months.