European utilities slide on talk of EU emissions trading changes

Oersted A/S

12/02/2026 14:10

By Danilo Masoni

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.

Europe’s benchmark carbon contract CFI2Zc1  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).

"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 .SX6P was last down around 2%, the biggest sectoral decliner, trimming some of this year’s strong gains. The broader STOXX 600 .STOXX rose 0.4%.

Among the steepest fallers were Germany’s RWE RWEG.DE, Italy’s A2A A2.MI and Enel ENEI.MI, Finland’s Fortum FORTUM.HE, Austria’s Verbund VERB.VI and Denmark’s Orsted ORSTED.CO, 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)

 ((danilo.masoni@thomsonreuters.com))