EU ETS auction supply cut around 20% as €20 billion REPowerEU sales programme winds up
The European Union’s three-year programme of additional carbon allowance auctions to fund the REPowerEU plan is concluding ahead of its 31 August 2026 deadline, triggering an immediate tightening of supply in the EU Emissions Trading System (EU ETS), according to official notices published by the European Commission’s climate directorate.
The programme, which began in July 2023, was designed to raise €20 billion for the Recovery and Resilience Facility (RRF) through two streams: €12 billion from allowances that would otherwise have been auctioned for the Innovation Fund (IF-RRF), and €8 billion from allowances brought forward from member state auction volumes originally scheduled for 2027 to 2030 (MS-RRF).
The €8 billion MS-RRF target was reached on 22 June 2026 after a cumulative 111,455,000 allowances had been auctioned, and under the Auctioning Regulation the associated sales were immediately suspended. From 23 June until 31 August 2026, the volume in each common auction platform sale was reduced from 3,198,500 to 2,817,500 allowances.
The Commission stated in the same official notice that, based on prevailing price levels, the second leg of allowances allocated to the RRF was expected to reach its €12 billion revenue target in mid-July, at which point the 571,000 IF-RRF allowances included in each common platform auction would likewise be suspended through to 31 August. That second suspension equates to a reduction of roughly 20% in daily common platform auction volumes for the remainder of the summer, on top of the June cut, and marks the definitive end of the additional REPowerEU supply that has flowed into the market since mid-2023.
The accelerated completion of the programme reflects elevated carbon prices. According to the Commission’s official auctioning data, the average EU allowance price across the first six months of 2026 was €75.39, compared with a two-year reference average of €69.02 for 2024 to 2025. Stronger prices meant revenue targets were achieved with fewer allowances sold than originally scheduled.
The REPowerEU plan was adopted in response to the energy crisis that followed Russia’s invasion of Ukraine, and directed the €20 billion in ETS proceeds towards member state investments in renewables, energy efficiency, grids and reduced fossil fuel dependence. The allowances sold under the MS-RRF stream were borrowed from future auction calendars, meaning supply in the 2027 to 2030 period will be correspondingly lower.
The supply reduction comes at a busy moment for the EU carbon market. Auctioning revenues from the EU ETS now flow to national budgets, the Innovation Fund, the Modernisation Fund and, from 2026, the new Social Climate Fund, and the system generated €38.8 billion in auction revenues in 2024 alone, of which some €25 billion was distributed directly to EU member states. Market participants are also awaiting the Commission’s wider EU ETS review, which the Commission has committed to delivering by July 2026, covering the trajectory for phasing out free allocation and possible sector-specific fallback benchmarks.
