CCA Update: The Attorney General didn’t present anything following the end of the 60-day Executive Order review period. This is good news as the market can move ahead and refocus on the main drivers, namely the rulemaking package. California also gave guidance that the CCA program extension will be addressed as a seperate policy bill rather than part of the budget process, which was due June 15. Considering the legislature breaks for the summer in mid July, there is a possibility that we may not see any progress on the extension prior to then. However, the market has barely moved. Why? We’re at the floor. It's great to see it holding, as it should.

Washington state and RGGI both held their second quarterly auctions for the year on June 4. The results are posted below.

Washington Auction #10 Results: Highest Compliance Demand Since the Program's First Auction

• WCA auction cleared at $58.51, the highest settlement price since Q4 2023 and 17% higher than Q1 settlment of $50.00.
• The settlement was just below the Allowance Price Containment Reserve (APCR) Tier 1 trigger level of $60.43. We could see the APCR triggered (releasing additional allowances into the market) in the later half of this year especially considering the market's tight balance.
• The front month WCA futures were $3 below the settlement price a day prior to the aution and closed at $56.05 on the release of the results. The Dec25 futures hit $65 on the release and closed slightly lower at $63.49.
• All 6.7 million allowances offered were sold with a bid to cover ratio of 2.44. Total bids ahead of the auction amounted to 16.5 million allowance, 2% under the last auction though the 9.7 million unfilled bids represented the highest level since inaugural auction.
• Compliance entities purchased 93.26% of current vintage allowances, the highest since the program's first auction and over 11% more than the Q1 auction.
• View the full results here.

RGGI Auction 68 Results: Sub-$20, in Line with Expectations

• RGGI auction cleared at $19.63 per short ton, down slightly from the previous auction settlement of $19.76 but in line with expectations of a sub-$20 settlement in light of no new updates on the Third Program Review.
• Although the sale price was above the Cost Containment Reserve (CCR) trigger of $17.03, the reserve was already depleted during the first quarterly auction of this year. If the price clears above the the The CCR is designed to help stabilize prices by injecting 10% of that year's cap into the market supply if the price clears above a predetermined level.
• All 15.2 million current-vintage RGAs were sold, with a bid-to-cover ratio of 2.50, in line with the historic average. 
• The outcome represents a third successive lower settlement after auction prices set a record $25.75/ton in September last year. 
• Prior to the auction December 2025 RGA futures had dropped below $20/ton, matching traders’ expectations for the sale, but the benchmark contract rose back above the $20 mark in the wake of the sale, eventually reaching a high of $21.37/ton on June 12th.
• Total proceeds: $299.25 million — a multi-year low, reflecting lowered revenue since Q2 2023
• Compliance entities purchased ~65% of allowances.
• View the full results here.

EUA Total Number of Allowances in Circulation (TNAC) Release

The European Commission published its latest annual calculation of total EUA supply last month, a figure that determines how many allowances will be taken out of circulation and sent to the Market Stability Reserve (MSR) in the year starting from September.

The Commission calculated that 1.148 billion allowances were available in the market at the end of 2024, an increase of 2.8% or 31 million permits from 2023. Under the withdrawal formula for the MSR, 24% of the total number of allowances in circulation (TNAC) is moved into the reserve; this means 275.5 million EUAs will be taken from the auction supply for the period from September to August 2026. This MSR withdrawal is 8.7 million alliances higher than the September 2024-August 2025 period.

The TNAC is calculated in the middle of each annual compliance cycle, after installations covered by the EU ETS have reported their previous year’s emissions, but before they are required to surrender allowance matching those emissions. The calculation assumes 100% compliance in order to generate its data.

The parameters for the MSR operation are well-defined: if the TNAC is calculated at more than 833 million, then the MSR withdrawal takes place. But if the TNAC falls between 833 million and a lower threshold of 400 million EUAs, the reserve does not operate. In the event that the TNAC is below 400 million EUAs, then the MSR re-injects 100 million EUAs into the auction supply.

Since the reserve began operating in 2017, its has taken a total of around 2.5 billion EUAs out of market supply, though analysts have predicted that the MSR may not operate as 2030 approaches and the market cap continues to decline. The launch of the MSR is widely credited with sparking a long-term rallying EUA prices from below €10/tonne to as high as €101.00/tonne in 2023, as traders anticipated an aggressive reduction in market supply combined with a more ambitious 2030 climate target.

However, the latest TNAC shows that emissions have fallen even faster than the MSR has reduced supply. Historical data showing the MSR’s annual withdrawals show that the 2018 withdrawal was the highest at nearly 400 million tonnes, and has fallen relatively steadily each year since: from 379 million EUAs in 2020 to 2023’s low of 266.8 million.

The Commission plans to carry out a review of the functioning of the MSR in 2026, and has already issued a public call for evidence ahead of this process. The TNAC for 2024 and MSR data for 2025-26 produced barely a ripple in the EUA market, as traders continued to look for direction.

The December 2025 futures contract has traded between €70 and €75/tonne for more than one month, with efforts to break above this range meeting stiff resistance in the last few days. The EUA market remains somewhat in thrall to geopolitical events, macroeconomic sentiment as well as the fortunes of TTF natural gas, and has not reacted to any of its own fundamental indicators for some time.

Analysts are starting to see potential for upside in the coming months, with most recently Citi targeting an €80 price in the next three months. A hot summer season with strong power demand for cooling, lower than normal hydroelectric reserves and the approaching compliance season are all cited as bullish factors.

But at the same time, a downturn in demand from China for natural gas has kept a lid on the TTF market and is allowing Europe to refill storages at lower prices, thereby reducing upward momentum for carbon. And continuing macroeconomic uncertainty, particularly around the US’ on-again, off-again tariff regime means that the outlook for industrial output remains clouded.

At the regulatory level, Europe is embarking on the long process of agreeing its 2040 climate targets. The Commission has already indicated its preferred goal of an overall 90% reduction from 1990 levels, but how this is shared between the EU ETS and non-market sectors of the economy remains to be negotiated.

One point of great interest to the market is the emerging discussion over whether the EU should exploit the international market for carbon credits being set up by the UNFCCC. Senior Commission officials have said that allowing the use of some credits could offer “flexibility” to member states struggling with high energy costs and the industrial downturn. But numerous stakeholders are cautious, warning that allowing the use of emission reductions generated elsewhere risks watering down Europe’s climate ambition and giving emitters

Carbon Market Roundup

The weighted global price of carbon was $51.39, up 3.9% week over week. EUAs were up 3.3% to close at €75.94. UKAs were up 8.3% at £54.56. CCAs were down 0.1% at $26.82. RGGI was up 4.9% at $21.40. WCA was up 6.9% at $61.00.