ESMA – EU Carbon Markets, Oct 2024

The European Securities and Markets Authority (ESMA) is tasked with monitoring the integrity and transparency of the EU carbon market under the revised EU ETS Directive. ESMA's annual report on EU carbon markets covers pricing, volatility, auctions, secondary market trading, and derivatives market positions. This report utilizes both commercial and regulatory data sources to provide detailed insights into the functioning of the EU ETS market. Despite a decrease in prices in 2023 following a three-fold increase in 2021, some structural features of the market, such as concentration in primary markets and trading through derivatives in secondary markets, remain unchanged. ESMA's analysis did not uncover any significant issues in the functioning of the EU carbon markets, but it suggests improvements in transaction reporting to enhance the identification of trading strategies.