As carbon prices plunge, market seen vulnerable to short squeeze

The price of carbon allowances plummeted in Europe against the backdrop of the escalating Russian-Ukrainian war, lowering the cost of carbon emissions for the EU's most polluting companies. That fall has since been rapidly reversed.
Although fundamentals remain weak and carbon prices are half of what they were a year ago, market participants said a fresh round of global tensions could drive up natural gas prices and potentially trigger a short squeeze in the carbon market.
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