The analysts said the decrease in centrist parties represented in the European Parliament, and a rise in support for far right and eurosceptic parties, will result in more divisive parliamentary votes on changes to the regulatory framework which could spark volatility in the EU Emissions Trading Scheme (ETS).
“The composition of the new Parliament will have implications for the development of European policy for the rest of this decade, including on the further process of determining a 2030 climate and energy framework and reform of the ,” said senior analyst Hæge Fjellheim.
The analysts note that the parliamentary majority in favour of tighter energy and climate policy will become less stable with the increased inclusion of right wing and eurosceptic parties which do not typically support climate policy to the same extent.
TRPC head of EU carbon analysis added: “We expect the votes related to changes in the regulatory set-up of the European carbon market to be tighter with the new Parliament, which could lead to greater EUA price volatility in the future.”
However, a UK-based carbon trader told Utility Week the election result has not had any direct market impact so far.
“Talking to people in the market, the perception is that the EU elections change little in the general short -term picture,” he said, adding that the market remains supported by decreased auction supply entering the market, and steady German power prices.
The election of the new European Commission President, followed by the appointment of the new college of commissioners, will take place over the summer with concrete work on climate policy issues only due to begin in the autumn.