EU carbon prices ended slightly higher on Wednesday on thin turnover as traders digested the European Commission’s proposal to reform the market and fretted about Greece.

The Dec-15 EUA contract settled up 3 cents after on ICE Futures Europe after moving in a narrow €7.74-7.83 range with just 7 million units changing hands.

This was around half of Tuesday’s volume, a drop partly due to today’s rare gap in the near-daily schedule of government auctions curbing secondary activity.

Traders said the EU’s post-2020 ETS reform proposal published today contained little that would move prices beyond Tuesday’s five-month high of €7.85.

“I don’t think there’s a lot in there that can change things in the near term, but it was encouraging that the EC did what it said it was going to do and got the proposal out on time,” said one trader.

“I think a lot of what came out was already known or expected and its another year or two before it gets finalised.”

The proposal sets out the rules for Phase 4 of the EU ETS (2021-2020), when the Commission expects prices will average €25 as the annual cap reduction rate deepens to 2.2% from the current 1.74%.

“Today’s proposal does not drastically change the outlook for the overall supply of allowances but rather reshuffles the amount of free allocation vs. auctioning.  We now expect European carbon prices reaching €17 in 2020, rising to €30 in 2030”, said Emil Dimantchev, a senior analyst at Thomson Reuters.

He said the proposal confirms that companies regulated under the EU ETS will have no additional use of international carbon credits, a further limit to supply.

Meanwhile, other financial markets were also subdued as the Greek debt saga continued to unfold.

The Greek Parliament is expected tonight to narrowly pass the biting reforms needed to secure the country’s future in the eurozone, but PM Alexis Tspiras might be forced to step down if his ruling anti-austerity party rebels.

By Ben Garside – ben@carbon-pulse.com