Monthly Report | January 2025

REGO 

• It has been a relatively slow start to 2025. CP23 has been very illiquid as buying interest looks to have declined, particularly for Bio certs which are not considered to be as “deep green” as their Wind, Solar, Hydro (WSH) counterparts.
• We have seen WSH trade in the low £1s, which probably sits below most analysts’ “low price model scenario” at the beginning of the year.
• We expect to see more action at the end of the Compliance Period as suppliers get a final picture of the numbers and look to balance their position.
• CP24 and CP25 prices have also been relatively flat although we’ve seen a number of sizeable trades for CP26 and CP27 as suppliers look to forward hedge.

• Poor weather in Northern Europe and the continued impacts of the cessation of Russian gas flows through Ukraine has driven an increase in gas prices, translating across to rising carbon prices.
• EUAs have climbed above €80/mt and UKAs topped £45/mt.
• Given increased uncertainty around European gas markets, in the short term the market is looking bullish – and is likely to remain elevated in February and March during peak European power demand.
• There are some tentative signs of recovery in European industrial demand, but manufacturing – which is crucial to carbon demand – remains relatively weak.
• Further forwards, ongoing uncertainty around US trade tariffs may impact European economic growth and put downward pressure on pricing.