Today’s wrap-up was dominated by easing geopolitical risk premia in energy markets, while policy uncertainty stayed front and centre in carbon and climate regulation. Oil softened on improved US Iran dialogue, Europe’s carbon market saw another bout of headline-driven volatility tied to ETS reform nerves, and the Commission signalled a more explicit role for certified removals in post-2030 national target compliance. In renewables and fuels, geothermal was positioned as a firm power option with meaningful scale potential, while Brussels moved to tighten the biofuels feedstock rulebook by phasing out palm and soy by 2030.

Macro and others

Oil retreated as Middle East supply risks eased. Brent drifted toward the high $60s on signs that US Iran talks in Oman reduced the immediate probability of disruption, even as the market remains pulled between geopolitical risk and a broader 2026 surplus narrative. Attention now shifts to a heavy week of outlook updates from OPEC, the IEA and US agencies, plus signals on India’s crude purchasing stance after trade-related headlines.

Japan restarted reactor No. 6 at Kashiwazaki-Kariwa for a second time after addressing a control-panel issue that halted the prior attempt. Tokyo Electric Power is targeting commercial operations by mid-March, a closely watched milestone given the plant’s scale and the political push to bring more nuclear capacity back to support energy security and decarbonisation.

India’s preliminary trade package with the US included a commitment to purchase $500 billion of US energy and other goods over five years, alongside indicative tariff adjustments on both sides. The headline figure matters for global LNG and crude flows, but the practical impact will depend on final legal text, implementation sequencing, and whether it materially alters India’s approach to Russian crude in the near term.

France is set to unveil its overdue energy policy roadmap to 2035 this week. Early signalling suggests the government will again present nuclear buildout and renewables expansion as complementary, with a focus on offshore wind, solar and geothermal, and an onshore wind preference for repowering existing sites. The strategy is expected to lean on electrification to reduce exposure to oil and gas imports.

Canada moved to repeal its national zero-emission vehicle sales mandate. Ottawa is pivoting toward tightening vehicle GHG standards and pairing them with purchase incentives and infrastructure plans, reflecting the broader political and market recalibration on EV uptake trajectories seen across other jurisdictions.

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Carbon markets

EU ETS pricing remains prone to sharp, headline-led moves. Reports pointing to potential changes in the pace and mechanics of free allocation, plus broader ETS review speculation, drove a deep sell-off, with analysts stressing that short-term fundamentals still point to a tight balance in 2026 and 2027. The practical takeaway for corporates is continued volatility risk around policy signalling, even when concrete legislative text is not yet on the table.

For ETS2, the European Investment Bank’s frontloading facility was framed as a practical support mechanism for a 2028 start. The early loan capacity is designed to let member states pre-finance social and climate investments ahead of ETS2 auction revenues. The debate now is whether the initial scale is sufficient and how quickly additional tranches follow.

The Commission also indicated it wants a closer linkage between national post-2030 targets and the EU’s emerging carbon removal certification framework. Officials flagged certified removals and carbon farming credits as a potential enabler for meeting updated ESR and LULUCF trajectories, supported by demand-side mechanisms such as an EU Buyers’ Club and a purchasing facility. The direction of travel is toward structured demand for high-integrity EU-certified removals, but the specifics will hinge on the Q4 legislative package and how flexibilities are defined.

Renewables and biofuels

Geothermal was positioned as an underused firm-power lever for Europe. Ember’s analysis suggests up to 43 GW could be developed at broadly competitive costs, potentially replacing a meaningful share of coal and gas generation and supporting rising industrial and data-centre load. The constraint remains project economics, drilling risk, and permitting, but the narrative is shifting toward geothermal as a reliability tool rather than a niche resource.

Brussels launched consultation on tightening the Renewable Energy Directive delegated rules by phasing out palm and soy-based biofuels from quota eligibility by 2030, with a stepped reduction path from 2025. This would accelerate the shift toward lower iLUC-risk feedstocks and reinforce the policy direction already taken by several member states.

Indonesia signalled an increasingly domestic-first posture for palm oil, linking biofuel expansion to energy security and jobs. The strategic message is clear: feedstock competition between export markets and domestic blending targets is likely to intensify, with implications for global vegetable oil balances and biofuel economics.

Corporate sustainability and regulation

France’s roadmap and the Commission’s direction on removals both reinforce a theme for 2026: policy is increasingly focused on implementation mechanisms, not just targets. Separately, BNP Paribas reported that over 80% of its energy production financing exposure is now directed toward low-carbon energy, driven partly by reduced fossil exposure, keeping it ahead of its 2030 trajectory.