EU Carbon Prices Could Hit €130 by 2028

EU carbon prices may reach between €100 and €130 per tonne before the decade ends, a shift that could dramatically scale up carbon capture, utilisation and storage (CCUS) across Europe’s industrial sectors. The projection comes from Goldman Sachs’ latest Carbonomics report, which highlights how stronger carbon pricing could support deep decarbonisation while keeping energy costs stable.

A central element of the bank’s analysis is the expected transformation of global gas markets. Goldman Sachs anticipates a 50% rise in global liquefied natural gas (LNG) supply later this decade, a development that may ease gas prices in Europe and open the door for tougher climate policy without burdening businesses or households.

As the report states, ‘We argue that the lower natural gas prices we expect in the second half of the decade provide an opportunity for EU policymakers to push the EU ETS to the price level required for the decarbonisation of heavy industry without energy cost inflation to industry and consumers.’

According to the bank, a carbon price of €100–130/tCO2e represents the point at which large-scale CCUS deployment becomes economically sustainable. While current EU Allowance (EUA) prices sit below that range, Goldman Sachs expects them to rise steadily as the EU Emissions Trading System (ETS) undergoes significant structural reforms.

Key changes include the progressive phase-out of free allowances under the EU’s Fit for 55 policy package, which aims to cut emissions 55% by 2030 relative to 1990 levels. The Market Stability Reserve is also expected to play a role by absorbing excess allowances and helping maintain tighter market conditions.

Goldman Sachs does, however, anticipate some short-term fluctuations. Lower gas prices in 2026–2027 could temporarily soften EUA prices, though the bank argues this period will still be crucial for policymakers. As the report notes, ‘But it also provides an opportunity for EU regulators to tighten the carbon market and achieve their ‘Fit for 55’ commitment, leveraging lower energy prices to accelerate the energy transition — preventing an excessive decline in power prices from potentially derailing the build-up of renewables.’

Should these trends materialise, the coming years could represent a decisive moment for Europe’s industrial transition, unlocking new CCUS projects and accelerating the shift toward lower-carbon production.