This week’s wrap-up highlights renewed volatility across energy and carbon markets, driven by geopolitics, late-season weather risks, and intensifying pressure on climate policy frameworks. Developments in gas, oil, CBAM, and sustainable fuels underscore the growing tension between decarbonisation ambition, industrial competitiveness, and energy security.

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Macro and others

European gas futures moved higher as traders priced in the risk of a late-season cold spell, with storage levels below 40 percent amplifying sensitivity to weather-driven demand. Market participants remain cautious as volatility persists across gas markets amid shifting forecasts and geopolitical exposure.

Oil prices eased after Iran confirmed that negotiations with the United States are scheduled for Friday, reducing immediate concerns around military escalation. While a geopolitical risk premium remains embedded, markets reacted to the prospect of renewed diplomacy, even as uncertainty continues around supply risks in the Middle East and Ukraine.

India and the United States signalled progress toward a formal trade agreement, with officials confirming that a deal is expected to be signed in March. India is set to reduce tariffs on US goods once legal documentation is finalised, while Washington is expected to ease tariffs on Indian exports following a joint statement.

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Carbon markets

The UK marginally narrowed its projected shortfall against the sixth carbon budget, though the gap remains substantial. Updated government modelling shows progress driven by housing decarbonisation and waste reforms, but aviation and shipping emissions are now included for the first time, raising the bar for compliance. Revised UK ETS carbon price assumptions show significantly higher long-term trajectories compared to last year’s modelling.

Energy-intensive industries renewed calls for a freeze on EU carbon prices, warning that high energy costs and rising ETS prices are accelerating deindustrialisation. Industry groups are urging policymakers to halt benchmark tightening, redirect ETS revenues back to affected sectors, and delay further expansion of carbon pricing mechanisms.

In voluntary markets, a Vietnamese developer announced that its improved cookstove project in Laos has received CORSIA eligibility for the 2024–26 phase. The designation allows credits to be sold into global aviation markets, though questions remain around registry labelling and verification timelines. Demand for CORSIA-aligned credits continues to tighten as aviation offset needs grow.

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Renewables and biofuels

All five previously halted US offshore wind projects have been cleared to resume construction following court-issued preliminary injunctions. The rulings allow work to restart while legal challenges to federal stop-work orders proceed, restoring momentum to projects that had already cleared extensive permitting processes.

Indonesia confirmed plans to raise the mandatory bioethanol blending rate in gasoline to 10 percent by 2028, pushing back earlier targets due to supply constraints. The government plans infrastructure upgrades and feedstock diversification to support the higher mandate and reduce fuel import dependence.

In Italy, Eni and Q8 Italy approved a joint investment to develop a large-scale biorefinery in Sicily. The facility will produce HVO and sustainable aviation fuel using waste and residue-based feedstocks, supporting EU emissions reduction targets across road, marine, and aviation transport.

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Corporate sustainability and regulation

The Science Based Targets initiative released an updated draft net zero standard for the automotive sector, refining its focus on Scope 3 emissions from vehicle use. Automakers will be able to choose between use-phase emissions targets or zero-emission vehicle sales metrics, with consultations open through March 2026.

Dutch financial regulator AFM warned banks and investors to improve the clarity and substantiation of sustainability claims. Supervisors identified weaknesses in specificity, accessibility of supporting data, and the use of vague language, and confirmed heightened scrutiny of ESG claims in 2026.

China raised strong objections to the EU’s subsidy probe into Chinese wind turbine manufacturers, warning that the investigation risks undermining investment confidence. The EU maintains that state-backed financing may distort competition, signalling continued tension in clean energy trade relations.

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