What if the EU guts its 2040 climate target?
Gutting the 2040 target and delaying ETS2 collapses EUA carbon prices — short EU carbon and long EU energy-intensive industrials/utilities that get cost relief; mildly risk-on for EU equity. The analogue is the 2013 backloading-vote failure that briefly sent EUAs under EUR3. This is a regulatory carbon-price event, so the cascade dragging in wheat/corn/food-CPI via a climate-supply crop channel is simply wrong — no drought is involved. The trigger is policy-driven carbon and industrial relief, not agricultural yields.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 1–3 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a mixed shock. Brussels reopens the climate law to slash the 90% goal and delay ETS2 past 2028, collapsing EU carbon prices. The trigger decomposes into signed root‑shocks — Industrial demand ▲ · European energy ▼ · Risk appetite ▲ — which propagate through our causal graph to the markets below.