Monthly Report | May 2025

REGO 

• As CP23 draws to a close and the Ofgem FMD deadline looms, we are seeing buying interest dry up on WSH and Bio REGOs. However some last minute activity from suppliers is expected as they balance their REGOs against their final supply position.
• The outlook remains long with plentiful certificates still available in the market – and it is not expected that any buying interest at this time will support a price increase.
• As we look at future CPs, we have seen some significant volumes trading further along the curve as suppliers look to hedge their position, but overall the outlook looks bearish compared to CP23 and the start of CP24 as the demand outlook from energy suppliers and corporates remains much lower.
• We are currently seeing the mid price at around:
  • CP23 – WSH £0.27p & Bio £0.16p
  • CP24 – WSH £0.85p & Bio £0.55p
  • CP25 – WSH £1.05p & Bio £0.70p
  • CP26 – WSH £1.95p & Bio £1.10p
  • CP27 – WSH £2.15p & Bio £1.80p

• Talk of potential trade wars made April a tumultuous month for global markets – with resultant concerns around growth for European economies. This bearish sentiment led to lower EU carbon prices during the start of the month.
• Some easing of concerns around US tariffs helped the market to recover in late April and early May.
• Speculation around the potential linking of the UK and EU ETS drove a significant increase in UK carbon prices, with prices climbing to a year high with the announcement that a broad-brush agreement had been reached.
• The linking of the markets is expecting to lead to a convergence in EU and UK carbon pricing – with UK carbon prices ticking up to EU pricing levels – along with enhanced market stability and investor confidence, although timelines for the implementation of the link-up remain unclear.