Annual revenues from emission trading allowances (EUA) for the country amount to €822.2 million in 2024, or a substantial drop of over €345 million from a year earlier. This breaks a seven-year trend of continuous growth in EUA revenues. This is according to information published by the Ministry of Enviroment and Water.

The number of CO2 emission allowances from installations auctioned is 12.7 million or 9.3% less than the previous year. According to the EEX calendar for 2025, the number will be 13 137 532. This figure will be adjusted after the Commission’s review (June 2025) of the total amount of allowances in circulation in the EU and the decision on the quantities of allowances to withdraw or release from the Emissions Market Stability Reserve for the period September 2025-August 2026.

CO2 allowances prices

Emission allowance prices traded below forecasts for 2024 and those auctioned failing to go above 76 €/tCO2. The average price of emission allowances  in the joint auctions was around €65/tCO2 for 2024. Prices between 50 and 60 €/tCO2 were not an isolated case, yet those between 60 and 70 €/tCO2 prevailed. The highest price for the year was at 75.35 €/t CO2 (3 June 2024).

Demand was influenced by the weakness of the industrial sector, mild weather and increased renewable energy production.

On the supply side, the market was reporting a surplus, mainly due to the front loading of allowances to finance REPowerEU packages. Accordingly, total allowances supply for the year shrink by around 1%, which was significantly less than the linear reduction factor of 4.3%. Therefore, between 2025 and 2030 a stronger reduction in the amount of allowances in circulation is expected. This in turn indicates that higher EUA prices can be expected in the coming years.

In December 2024, ABN – Amro published a forecast for CO2 allowance price movements in 2025. This year, prices are expected to fall in February and March as uncertainty in the gas market clears. It is possible that the recovery in EUA demand from the manufacturing sector will gain momentum in the first half of 2025 and then slow in the second half of 2025. This loss of momentum is a consequence of the expected duties under the new US administration, which will cause a net adverse impact on growth and a divergence in monetary policy rates across the Atlantic in 2025. This means that demand for industrial CO2 allowances is expected to be modest in the second half of 2025. EUA prices will continue to depend on the development of gas markets and weather conditions, given insufficient electricity storage capacity (storage capacity helps to smooth the intermittency of renewable generation). It should be borne in mind that the shipping sector will surrender allowances for GHG emissions for the first time in 2024, which will also put upward pressure on prices. In conclusion, in 2025 prices are expected to decrease early in the year and regain momentum in the second half of 2025. For the first quarter of the year, ABN AMRO’s forecast is for 65 €/tCO2, for the second quarter 67 €/tCO2, for the third quarter 73 €/tCO2 and for the fourth quarter 78 €/tCO2.

Lower prices are predicted by Trading Economics’ global macro models in the end of 2024, according to which EU carbon allowances in 2025 will trade at around 64- 65 €/tCO2 . All forecast are under revision.

Reuters’ October forecast is for an average price of around 76.88 €/t CO2 in 2025 and 92.48 €/t CO2 in 2026.

Background

Bulgaria

Revenues from ETS – an important element of the price policy of the EWRC.

Revenue from emission allowances in Bulgaria is an important instrument for driving low carbon development. The Energy System Security Fund receives 100% (until June 2016 – 77%) of the auctioning revenues of all emission allowances allocated to Bulgaria for greenhouse gas installations, which are used to reduce the price of obligations to society.

In Decision C-17/30.06.2024 for the price period July 2024-June 2025 the estimated revenues from the sale of emission allowances are assessed at BGN 1 574 443 thousand at a price of 70 €/t CO2.

For the first six months of the price period, the implementation of the forecasted revenues is approximately 55%.