Macroeconomics & Energy Policy

UK Energy Bills to Rise with £28 Billion Grid Investment

UK regulator Ofgem has approved a major investment in energy infrastructure, giving the go-ahead for £28 billion in upfront funding, with total grid investment expected to reach £90 billion by 2031. While the plan is designed to modernise electricity and gas networks and reduce long-term costs, it will result in an immediate increase of £108 in annual household energy bills. Ofgem argued that the investment is essential to support renewable integration and cut reliance on imported gas, but the move has drawn criticism amid government commitments to lower consumer energy costs.

Oil Markets Steady as Geopolitical Tensions Mount

Oil prices held modest gains as markets absorbed developments surrounding Ukraine ceasefire talks and escalating rhetoric between the US and Venezuela. Brent settled near $63 per barrel, while WTI hovered around $59. Concerns over oversupply persist, but geopolitical risk and infrastructure attacks have prevented prices from falling further. US crude inventories continued to rise, highlighting near-term bearish fundamentals despite increasing strategic tensions.

Copper Hits Record High Amid Tariff Speculation

Copper prices surged to a new record above $11,500 per tonne, driven by a sharp increase in withdrawals from LME warehouses and speculation about US tariffs. The market is pricing in a potential global squeeze as inventories fall and investors anticipate trade measures. Mining disruptions and strong US demand have widened regional price arbitrage, fuelling further gains.

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Carbon Markets

Serbia Approves Domestic and Import Carbon Tax Laws

Serbia has passed legislation introducing a domestic carbon tax and an import levy on carbon-intensive products from 2026. The domestic tax, set at €4 per tonne of CO₂e, will apply to sectors such as cement, power, fertilisers, and steel. The import tax mirrors EU CBAM sectors and aims to shield Serbian exporters from penalties under EU carbon pricing rules. The move brings Serbia closer to EU climate policy alignment and follows its updated 2035 NDC pledge.

Thailand Advances Cap-and-Trade and Carbon Tax Plans

Thailand’s cabinet has approved proposals for a climate law introducing an emissions trading system and carbon taxes. The cap-and-trade scheme would apply to power, manufacturing, and agriculture, while a new tax would cover more than 30 fuels, including LNG and diesel. Though still awaiting parliamentary approval, the legislation reinforces Thailand’s target to reduce emissions by 47 per cent by 2035 and reach net zero by 2050.

Low-Quality Carbon Credits See Price Rebound

Prices for lower-tier voluntary carbon credits (Tier 3) rose nearly 9 per cent in November, narrowing the premium gap with high-quality credits. Tier 1 and 2 credits dipped slightly, suggesting a rebalancing of market interest. Analysts attribute the rebound to stronger demand for select REDD+ and avoided deforestation projects, though overall sentiment remains cautious. The data reflects a broader shift towards quality and transparency in the voluntary carbon market.

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Renewables & Biofuels

French Government to Review Renewable Subsidies

France has appointed former EDF CEO Jean-Bernard Lévy and energy regulator Thierry Tuot to advise on optimising financial support for renewables and energy storage. The government aims to strike a balance between public and private contributions, with a detailed report expected within three months. The review comes amid rising grid congestion and debates about the cost-effectiveness of subsidy schemes.

Norway Expected to Become Net Power Importer by 2030s

A DNV report projects that Norway could become a net power importer in the early 2030s due to rising demand from sectors such as data centres. Electricity demand is expected to grow by 13 per cent over the next five years, outpacing supply. The shift would represent a departure from Norway’s long-standing status as a net hydropower exporter and underscores the need for accelerated grid planning and offshore wind deployment.

Green Shipping Corridors Expand as IMO Delay Continues

Despite delays in the International Maritime Organization’s net-zero framework, 25 new green shipping corridors were launched in 2025, bringing the global total to 84. Countries including China, India, and Brazil are now participating, with infrastructure projects underway. The Global Maritime Forum has urged national governments to accelerate development using existing tools and avoid waiting for international negotiations to conclude.

Shell Secures SAF Supply from Green Sky Capital

Shell has signed a long-term offtake agreement for sustainable aviation fuel from Green Sky Capital, backing construction of Egypt’s first commercial SAF plant. The facility is expected to produce up to 145,000 tonnes of SAF annually by 2027. Shell now supplies SAF to 80 locations across 18 countries and accounted for nearly 20 per cent of total SAF sales in Europe and North America in 2024.

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Corporate Sustainability & Regulation

France Pushes for Local EV Content in EU Auto Rules

France is urging the EU to require that 75 per cent of EV components be locally sourced, aligning with existing rules for combustion-engine vehicles. The proposal forms part of wider negotiations on the EU’s 2035 ban on new ICE vehicles. While Germany and Italy advocate a more flexible approach, France argues that local content requirements would protect industrial jobs and mitigate public backlash.

Climate Study Used by Central Banks Retracted

A key academic study widely used in global climate risk modelling has been retracted due to methodological flaws. Originally published in Nature and cited by the World Bank and OECD, the study’s removal raises concerns for central banks and the Network for Greening the Financial System, which had based new scenario planning on its findings. The retraction underscores challenges in accurately modelling climate-related economic impacts.

PCAF Updates GHG Accounting Standard for Financials

The Partnership for Carbon Accounting Financials has released an updated version of its global GHG accounting standard for financial institutions. The revised framework expands coverage across a broader range of financial instruments and introduces new guidance on financed avoided emissions and forward-looking metrics. The update reflects rising pressure on financial actors to enhance emissions transparency in line with frameworks such as IFRS S2 and the CSRD.