European Building Materials: Constructing Ideas

Research evidence excerpt

European Building Materials: Constructing Ideas

Global Research

20 July 2026ab

European Building Materials Equities

Europe including UKConstructing Ideas

Building Materials

Julian Radlinger, CFA

Debates: all about the ETS last week Analyst

For European heavyside companies, the main event of the week was the ETS Review on julian.radlinger@ubs.com

Friday. We wrote a preview and review on it and discussed the outcome with a very +44-20-7901 6558

large number of investors. If we had polled initial views amongst the people we spoke Patrick Rafaisz, CFA, FRM

with, it would be 50% positive, 40% neutral or not sure what to make of it, and Analyst

10% negative. Bulls were either outright positive on the Investment Booster and the patrick.rafaisz@ubs.com

idea that it likely favours large companies with long existing decarbonization project +41-44-239 90 66

lists, or just relieved that the free-allowance phase-out remained steep enough around Steven Fisher, CFA

2030 to imply that marginal plants are likely to exit the market around then. Bears Analyst

mostly argued the overall supply of emissions over the next 10-15 years will now be steven.fisher@ubs.com

higher based on the proposed reforms, such that the CO2 price trajectory is now likely +1-212-713 8634

lower than before, which means "dirtier" producers can "survive for longer". We

disagree with this notion. Initial feedback to the reforms by CO2 price forecasters was

indeed to cut the price trajectory, but still to levels that substantially reward

decarbonization incl carbon capture - for instance, carbon data analytics firm Veyt cut

their avg CO2 allowance price forecast for 2031-40 from €395/t to €221/t. In fact, we

think a price far above €200 in the next 5-10 years would likely lead to meaningful