Performance

Current EUA Price
--€
over +25% per year in the past decade
Financial indicators
ROI (10Y)
27.2%
Volatility (90D)
--
Volume (1D)
--
Beta
--
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Asset

European Union Allowances (EUAs) are a financial instrument under MiFID II, issued by the European Commission. Its supply is capped and decreases by design, progressively increasing its value. This has made it one of the top-performing assets of the past decade.

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Past and future performance

The EUA spot price has increased by +25% annually in the last decade, outperforming most major asset classes. Looking ahead, experts agree on sustained price growth, consistent with the market's design.

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Asset

Mechanism

A decreasing supply by design

To achieve its goal of carbon neutrality by 2050, Europe caps the number of tons of CO2 emitted within its territory through emission allowances (EUAs).

This cap gradually decreases each year to reach emissions targets through an efficient market-based mechanism.

The number of allowances issued is thus set, limited, and reduced each year, supporting a fundamental increase in their value.

Source : European Commission

Price Drivers

Structural long-term growth with short-term volatility

Like any market-based asset, the price of EUAs is driven by supply and demand.

Supply is steadily decreasing, which defines the long-term trajectory. It is a fundamental characteristic of the EU ETS market.

Demand fluctuates based on the CO2 emissions of covered industries at any given time. Various factors influence this, affecting prices in the short to medium term.

EUAs are a long-term asset attractive to investors with a buy-and-hold strategy.

Supply
Long-term effect
Regulation
Demand
Short-term effect
If low-carbon energy sources are cheaper than carbon-intensive ones, industries will shift and emit less CO2.
Energy
Economic shocks, (high interest rates, the COVID-19 pandemic…) can slow industrial activity and lower energy needs.
Macroeconomics
As decarbonation technologies become cheaper, industries invest and reduce their emissions, hence their demand for EUAs.
Technology
Cold winters boost heating needs, raising carbon emissions and EUA prices. Similarly, hot summers increase air conditioning demand.
Wheater
Please hover the card to reveal the descriptions.
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Past and future performance

Historical returns

A strong price appreciation

An over +25% per year increase in the past decade, driven by strategic regulatory adjustments and market stabilization mechanisms, ensuring the long-term scarcity of allowances.

Please hover the points to reveal the descriptions.
1
Low prices from a structural supply surplus
2005 - 2017
During this phase, EU regulators were calibrating the appropriate supply levels. The financial crisis in 2007-2008 led to a weaker demand than anticipated in 2005. The excess supply carried over year after year, keeping prices low, and highlighting the need for market adjustment mechanisms.
2
Price increase: achieving market balance
2017 - 2022
Regulatory measures began tightening the market and more participants were included in the EU ETS. The introduction of mechanisms like the Market Stability Reserve helped balance supply and demand, leading to a gradual increase in prices.
3
Price volatility: navigating macroeconomic crises
2022 - Feb 2024
Political and energy shocks required emergency measures in the EU ETS. These interventions stabilized the market during periods of significant external pressures, with additional allowances issued temporarily and compensated by reductions planned for 2026 and 2027 to maintain the overall emissions reduction trajectory.
4
Prices up:
the fundamental optimism comeback
Feb 2024 - Today
Market participants are once again focusing on the long-term characteristics of the EU ETS and the expected scarcity of EUAs. This renewed confidence reflects the system's robustness and the anticipated benefits of sustained carbon pricing.
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*Investment at risk. Past performance is not indicative of future returns.

Price Forecast

Experts’ forecasts on the rise

Experts widely agree on a price appreciation over the coming years, with a consensus estimate of 120€-160€ by 2030.

Please hover the points or lines to reveal the carbon analyts’ names.
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*Investment at risk. Past performance is not indicative of future returns.

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Financial indicators

Return on investment

A forward-looking investment

EUAs have shown a solid +27.2% increase over the past decade, outperforming many other asset classes. They are an attractive addition to portfolios seeking diversification opportunities with strong returns potential.

Volatility

Behaving like a commodity

With a 90D average volatility of daily returns in 2023 of 2.24%, EUAs exhibit higher volatility compared to stocks and bonds, but lower than energy commodities. EUAs are considered a long-term asset suitable for patient investors seeking a buy-and-hold strategy.

Liquidity

A very liquid market

The EU ETS market is a huge, liquid market with close to a trillion euros of annual trading volume. It’s diverse participants include regulated entities, financial institutions, and investment firms trading 3 billion euros daily. It is becoming a global asset class.

This ensures that investors can enter and exit positions in EUAs with ease, contributing to a robust and stable market environment.

Correlation

A strong diversification opportunity

EUAs exhibit very low correlation with major asset classes such as stocks, bonds, and energy commodities. Its low correlation indicates that the price movements of EUAs are largely independent of those in other financial markets. This unique characteristic makes EUAs a valuable diversification tool within a balanced investment portfolio.

CorrelationCorrelation
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EUAs are a powerfull addition to your portfolio

Homaio gives you financial exposure to the most mature and liquid emissions allowance market globally. As a private investor, you now have access to a financial asset ideal for a long-term, buy-and-hold strategy.

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