Finance
European utilities slide on talk of EU emissions trading changes
Published by Global Banking & Finance Review®
Posted on February 12, 2026
2 min readLast updated: February 12, 2026
Quick Summary
European utilities fall as EU considers emissions trading changes, impacting carbon prices and sector earnings.
European Utilities Decline Amid EU Carbon Market Intervention Talks
Impact of EU Emissions Trading Changes
By Danilo Masoni
Market Reaction and Sector Performance
MILAN, Feb 12 - European utilities tumbled on Thursday, tracking a sharp slide in carbon prices after suggestions the EU should intervene in the market, a move that investors fear could squeeze the sector’s earnings.
Factors Influencing Power Prices
Europe’s benchmark carbon contract fell to its lowest level since August after leaders from countries including Germany and Italy said the European Union should consider revising the bloc’s emissions trading system (ETS).
Insights from Industry Experts
"If that message is gaining traction, those who have been speculating on and buying green certificates are realising there could be some dilution ahead," said Luca Moro, CIO at SpesX, an Italian fund focused on the energy transition.
"If CO2 credits fall, power prices drop. And when power prices drop, generators earn less."
The European utilities index was last down around 2%, the biggest sectoral decliner, trimming some of this year’s strong gains. The broader STOXX 600 rose 0.4%.
Among the steepest fallers were Germany’s RWE, Italy’s A2A and Enel, Finland’s Fortum, Austria’s Verbund and Denmark’s Orsted, all down between 2.4% and 6.4%.
Utilities and renewables stocks in Europe had been buoyed in recent months by expectations they would benefit from rising power demand linked to artificial intelligence infrastructure. But potential changes to emissions rules complicates the outlook.
"You now have two opposing forces: deregulation tends to push power prices down, while data‑centre build‑out tends to push them up. The question is which one wins out first," said Moro.
The benchmark EU carbon permit contract was last down 6.5% at 73.35 euros per metric ton of CO2, LSEG data showed.
The ETS is the EU’s most important climate‑policy tool. It requires power plants and industrial sites to buy CO2 permits for their emissions and caps the total number of allowances in circulation, tightening over time to drive reductions.
(Reporting by Danilo Masoni; editing by Dhara Ranasinghe)
Key Takeaways
- •European utilities decline due to potential EU carbon market changes.
- •Carbon prices drop to lowest since August amid intervention talks.
- •Utilities index falls 2%, with major companies losing up to 6.4%.
- •Potential emissions rule changes complicate market outlook.
- •EU ETS is a key climate-policy tool requiring CO2 permits.
Frequently Asked Questions about European utilities slide on talk of EU emissions trading changes
1What is the EU Emissions Trading System?
The EU Emissions Trading System (ETS) is a market-based approach to controlling pollution by providing economic incentives for reducing emissions of pollutants.
2What are carbon credits?
Carbon credits are permits that allow the holder to emit a certain amount of carbon dioxide or other greenhouse gases. They can be traded in carbon markets.
3What is the role of sustainability in finance?
Sustainability in finance refers to the integration of environmental, social, and governance (ESG) factors into financial decision-making to promote long-term value.
4What is the impact of deregulation on power prices?
Deregulation can lead to lower power prices by increasing competition among energy providers, but it may also introduce volatility in the market.
