EU Carbon: Expert Call: EU ETS reform - what to expect

Research evidence excerpt

EU Carbon: Expert Call: EU ETS reform - what to expect

Global Research

1 July 2026ab

EU Carbon Equities

Europe including UKExpert Call: EU ETS reform - what to expect

Utilities

Wanda Serwinowska, CFA

Bottom line Analyst

On 29 June, we co-hosted a call with Philipp Ruf, Co-Founder of Transition Metrics, to wanda.serwinowska@ubs.com

discuss the EU carbon market. Key topics included an outlook and catalysts for European +44-20-7568 3980

carbon regulation including the EU ETS reform and potential implications for selected Mark Freshney

European sectors. You can view the slides here. We share the key takes below. Analyst

mark.freshney@ubs.com

EU ETS reform - key drivers +44-20-7568 3989

In 2026 the EU has started to address the future of the EU ETS (EU emissions trading Christabel Kelly

system). Within the ongoing reform, the speaker sees the key 4 design variables that Analyst

would have the largest impact on the carbon price and consequently on compliance christabel.kelly@ubs.com

+44-20-7568 2358

buyers: (1) Volume - key for long term pricing: The speaker focused on cap trajectory

post 2030 with linear reduction factor expected to be cut from 4.4% to 3.4%, inclusion Gonzalo Sanchez-Bordona

of offsets and the Market Stability Reserve reform (likely to be changed before 2030). Analyst

The speaker does not expect EU to decarbonize before 2038; (2) Distribution - most gonzalo.sanchez-bordona@ubs.com

+34-91-745 4147

relevant for equity investors: The speaker expects the existing system of free

allocations to be maintained; (3) Time/use of proceeds - key short term bearish Anna Webb

price risk: The speaker flagged the ETS Investment Booster with a goal to finance Analyst

projects for decarbonisation funded by a sale of 400m EUAs (c€30bn) and The Industrial anna.webb@ubs.com