What to make of speculation curb fears

Although publication of the article (EU’s Liese Has Carbon Price Rule in Crosshairs as Costs Soar) on Bloomberg appears to have prompted yesterday’s selling in the EU carbon market, it was not ‘new’ news to the carbon market.

Peter Liese, the lead lawmaker steering EU ETS reform through the European Parliament had flagged that he was looking into carbon market speculation several times in recent months - here and here for example.

The Bloomberg piece provided additional cover for prices to selloff after surging higher to new, perhaps over-bought levels over the past week.

In this article I consider what the pullback in prices has done to market structure, the potential options Liese has on his desk and what is likely to happen (or not) over the next couple of months.