Recent price moves are largely a result of compliance entities as well as the speculative side trimming positions as we reach the January futures expiry. However, the latter has begun building up their positions again. These month-to-month moves are packed full of noise given the heightened volatility of these markets. This take on the market price moves is a medium, long-term view.

The EU market has outshined California's over the past year primarily because EUAs have benefited from the Fit-55 tightening, market stability moving supply into a “deficit,” and EUA users moving faster and with more conviction than in the US markets. California began a similar trajectory to EUAs in the second half of 2021. We expect to see California review its program in 2022, which could be a catalyst for continued strength in much the way Fit-55 was.