As 2025 draws to a close, the week delivered important signals from global energy markets, shifts in carbon regulation, and significant updates across renewables and corporate sustainability. Coal demand appears to be levelling off, CBAM developments continue to reshape industrial pricing, and early signs of strain on green energy investment in Europe have emerged. Below is an overview of the key developments across macroeconomics, carbon markets, renewables and policy.

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Macroeconomics & Energy Geopolitics

Global Coal Demand Reaches a Plateau

The International Energy Agency reports that global coal demand is stagnating and is expected to fall by 3 per cent by 2030. While demand edges slightly higher in 2025, structural shifts towards renewables and LNG are steadily eroding coal’s dominance. In the US, coal consumption may rise by around 8 per cent in the short term due to delayed power plant retirements and elevated gas prices, but the longer-term trajectory remains firmly downward.

Asia’s Imports of US Energy Decline Despite Trade Pressure

Asia’s imports of US crude oil, LNG and coal have fallen in 2025, driven largely by China’s sharp reduction following higher US tariffs. Despite existing trade agreements, increases in imports by South Korea and Japan were marginal. LNG shipments from the US to Asia dropped by more than 35 per cent year on year, highlighting the gap between political commitments and actual market behaviour.

Oil Prices Supported by Venezuela and Russia Tensions

Oil prices rose modestly as geopolitical risk returned to the market. Washington’s blockade of Venezuelan tankers and the threat of additional sanctions on Russia heightened supply concerns, despite an otherwise bearish outlook. Volatility was exacerbated by thinner trading volumes ahead of the holiday period.

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Carbon Markets

EU and UK Target ETS Linkage by Mid-2026

The EU and UK have announced plans to conclude negotiations on linking their emissions trading systems ahead of the 2026 summit. Market participants have welcomed the move, citing expectations of improved liquidity and closer policy alignment, particularly ahead of EU CBAM enforcement on electricity. The UK is also delaying key ETS reform decisions pending the outcome of the talks.

CBAM Verification Set to Reshape the Italian Steel Market

As CBAM moves into its financial phase, Italian hot-rolled coil (HRC) prices are expected to adjust in 2026 based on product origin and verified emissions data. Tighter safeguard quotas and the increasing complexity of import compliance are likely to shift buyer preferences towards more transparent and compliant suppliers, potentially benefiting domestic producers.

CDM Projects Approved for PACM Transition

Eight Clean Development Mechanism (CDM) projects have received host country approval to transition to the Paris Agreement Crediting Mechanism (PACM) under Article 6.4. The transition deadline has been extended to June 2026 following COP30. Several countries are also preparing new PACM projects, while the number of bilateral implementation agreements continues to grow.

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Renewables & Biofuels

Sweden Warns of Green Energy Investment Freeze by 2027

Sweden’s Green Power lobby has warned that investment in renewable energy could stall by 2027 due to rising regulatory risk, political uncertainty and weakening capture rates. Investors are increasingly favouring hybrid solar–wind–battery projects to manage volatility, but long-term policy clarity is urgently needed to sustain investment momentum.

Poland’s TSO Sets Out Plan for Fossil-Free Grid by 2035

Poland’s transmission system operator, PSE, has published a zero-emissions strategy aimed at fully marginalising coal by 2035. Renewable capacity is expected to triple to 91 GW, supported by new battery storage and grid stabilisation investments. The plan includes the retirement of the ageing 24 GW coal fleet and the integration of Poland’s first nuclear unit by 2036.

EPA Biofuel Mandate Finalisation Delayed Until 2026

The US Environmental Protection Agency has announced that it will finalise biofuel mandates for 2026 and 2027 in the first quarter of 2026. The delay introduces uncertainty for fuel producers and commodity traders, many of whom are awaiting regulatory clarity before committing to supply contracts and investment decisions. The proposed rule aims to increase advanced biofuel volumes while tightening import requirements.

China’s CIMC Enric Launches Bioethanol Plant

CIMC Enric has begun commercial operations at a 50,000 tonne-per-year bioethanol facility in Guangdong province, China’s first plant based on pure biomass gasification. The ISCC EU-certified facility is already operating at 80 per cent capacity and has delivered its first shipment of green methanol to COSCO. An expansion to 250,000 tonnes per year is planned by 2027.

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Corporate Sustainability & Regulation

Microsoft Signs Clean Energy and AI Deployment Deal with Iberdrola

Microsoft has signed two new power purchase agreements in Spain with Iberdrola, bringing the companies’ total renewable capacity partnership to 500 MW across Europe and the US. The agreement also includes broader collaboration on hydrogen, battery storage and carbon credits, while deepening Microsoft’s role in providing cloud services to Iberdrola as both companies advance their decarbonisation and digital transformation strategies.

EU’s Hoekstra Confirms CBAM Export Support Plans

European Commissioner Wopke Hoekstra has confirmed plans to establish a CBAM-funded decarbonisation support mechanism for EU industrial exporters. The fund will be financed by 25 per cent of CBAM revenues and is expected to cover more than 140 product categories. With downstream products entering CBAM scope from 2028, the mechanism aims to mitigate carbon leakage while reinforcing the EU’s climate objectives.