Deciphering ETS Review & EUA Prices

Research evidence excerpt

Deciphering ETS Review & EUA Prices

Update

July 17, 2026 01:34 PM GMT

Morgan Stanley & Co. International plc+MCarbon | Europe Robert Pulleyn

Equity Analyst and Commodity Strategist

Deciphering ETS Review & EUA Robert.Pulleyn@morganstanley.comRachel Fletcher, Ph.D. +44 20 7425-4388

Equity Strategist

Rachel.Fletcher@morganstanley.com +44 20 7677-4089

Prices Charlotte Firkins

Commodities Strategist

Charlotte.Firkins@morganstanley.com +44 20 7425-3866

Key Takeaways Morgan Stanley Europe S.E., Paris Branch+

At first glance we see incremental positives for EUA prices vs expectations from Arthur Sitbon, CFA

Equity Analyst

the long-awaited ETS Review Arthur.Sitbon@morganstanley.com +33 1 42 90 71-03

Whilst many aspects were leaked ahead of time, and should not be surprising, the Morgan Stanley & Co. International plc+

key item of 400mt EUA Supply Investment Booster has caused market confusion Sarah E Lester, CFA

Our read is that the move from auction supply into traded market to grants to Sarah.Lester@morganstanley.com +44 20 7425-0551

ETS-covered companies is more positive for price, given not all will be sold. Marina Fuentes Juan

Research Associate

The phasing of the 400mt supply increase remains unclear, but our view is it is Marina.Fuentes.Juan@morganstanley.com +44 20 7425-2268

elongated over 10 years rather than the 3 years the market is concerned about. Arthur Descazeaud

Emission cap reduction for 2031-40 sees LRF fall as expected with less Arthur.Descazeaud1@morganstanley.com +44 20 7677-1282

incremental supply in 2031-35, and less in 2036-40. Utilities

Europe

Overall positive read for EUAs: We expect a positive market reaction for EUA Industry View Attractive

prices as the market navigates and deciphers the ETS document. The key item for