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ESG Economist - Scenarios shaping EU ETS prices
- Sustainability
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Using Bloomberg's EUCPM model, we run scenarios to simulate several market and policy changes in the EU ETS market. Our baseline scenario sees EUA prices rising to €145/tCO2 by 2030 and €200/tCO2 by 2035, driven mainly by lower supply of allowances and a decline in the Total Number of Allowances in Circulation (TNAC).
ESG Economist - Dutch balancing challenge in the renewable era
- Sustainability
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Considering the surge in renewable capacity to meet climate goals, a new challenge is facing power market operators, namely grid balancing. This is because of the intermittent nature of renewable generation, which makes supply vulnerable to weather conditions, especially in the absence of sufficient grid and flexible capacity. In such a case, curtailment and negative prices episodes become more frequent, along with frequency swings, which induces blackouts and economic costs. Furthermore, such situation would discourage investments and slowdown the transition process. The recent nation-wide blackout in Spain and Portugal put this challenge in the spotlight raising concerns about energy stability and security across Europe. This article dive into this topic with a focus on the Dutch case. We revisit the current and envisioned power mix in the Netherlands. We further explore the challenges, risks and opportunities facing development of flexible technologies in the Netherlands. We end with recommendations.
Carbon Market Strategist - Carbon price paradoxes and policy puzzles
- Natural resources
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Carbon prices stabilized post-Israel-Iran conflict, with gas and carbon markets showing signs of decoupling. New EU-US tariffs may hinder European growth, but EU fiscal stimulus could drive recovery by 2026. Power emissions decreased, reducing allowance demand; bullish sentiment is back as September's surrender date approaches. CBAM is expected to start in 2026, leveling EU market fields; EU-UK market linkage may lower EUA prices. We anticipate stable carbon prices in Q3; fiscal stimulus may increase prices from 72 EUR/tCO2 to 82 EUR/tCO2 by Q2 2026.
Gas Market Monitor - Market tightness is here to stay until 2026
- Natural resources
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In this edition: European gas prices show some stabilization post-Israel-Iran conflict… Peace talks between Russia and Ukraine could affect LNG flows and prices, with risks from US-imposed secondary tariffs… Lower European gas demand and industrial constraints persist; EU-US tariff deal will help to reduce market uncertainty… Tight LNG market remains through 2025; relief is anticipated in 2026 with new US and Canadian LNG supply… TTF prices are anticipated to maintain current levels in Q3, with an expected rise during the heating season, followed by a gradual decrease in 2026.
Oil Market Monitor - From war dramas to tariff trauma and beyond
- Macro economy
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The brief Iran-Israel conflict resulted in a temporary risk premium on Brent prices, amounting up to 12 $/b. OPEC+ decided to increase supply by 0.55 mb/d putting all voluntary cuts back to the market. We are heading for a supply glut in 2025 due to slower demand growth and increased output from OPEC+ and non-OPEC countries. However, persistent geopolitical tensions are keeping bearish sentiment from fully dominating crude prices. While trade tensions and tariffs would potentially disrupt crude flows. The demand-supply imbalance should push prices significantly lower.
Gas Market Monitor - Lower uncertainty with relaxed storage targets
- Natural resources
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We expect European gas prices to barely move in the coming months as long as there is no peace agreement between Russia and Ukraine. European gas prices have been responsive to the developments in the peace talks. Lower LNG competition from Asia, less stringent storage requirements, along with favorable weather conditions have put a lid on prices. Therefore the market has become less bullish. But the market remains tight. Volatility could emerge from adverse weather conditions, more geopolitical tensions, or prospect of substantial supply disruptions.
ESG Economist - CBAM impacts and opportunities
- Macro economy
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The Carbon Border Adjustment Mechanism (CBAM) is integral to the EU Green Deal, designed to level the playing field for domestic and foreign producers while minimizing carbon leakage. The European Commission's Omnibus proposal offers simplifications to ease administrative burdens, ensuring most emissions remain covered.
Carbon Market Strategist - Prices drop following unprecedented tariffs
- Sustainability
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Carbon prices plunged to levels last seen twelve months ago after a temporary surge in late March. The decrease in prices was driven by a decline in gas prices following the announcement of the sweeping global US tariffs on 2nd of April, which was beyond expectations both in terms of their scope and levels. The tariffs have led to deterioration of the global economic outlook. Lower expected Asian demand, a main competitor for LNG, relieved the tightness in the market and drove European gas prices downwards. Carbon prices closely followed the movement of gas, as the correlation between the two markets remains at high levels. Accordingly, market positioning has moved back to more neutral levels, as traders unwound long positions. Meanwhile, new emission data shows a reduction of 2.3% in 2024 compared to 2023, where emissions witnessed a decrease in the power and industrial sectors, while that of aviation observed an increase. Furthermore, the carbon market remains responsive to weather conditions and geopolitical developments. EUA prices were trading around 66 EUR/tCO2 at the time of writing.
Oil Market Monitor - Tariffs and OPEC+ shake up
- Macro economy
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Brent crude has reached lowest level in three years at $63 per barrel, affected by U.S. tariffs threats and OPEC+ revive production. New US tariffs and threats against oil from Venezuela, Iran, and Russia have reshuffled supply chains and increased volatility.
ESG Economist - How will EU-ETS 2 nudge households energy bills?
- Sustainability
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The European Union Emission Trading System (EU-ETS) is the flagship climate policy in the EU. It has been around since 2005 and mainly covers emissions from electricity generation, heavy industry, aviation, and most recently international shipping. The remaining combustion emissions from the road transport, buildings, and other light industry sectors will be addressed in a separate system called EU-ETS2. EU-ETS2 will be phased in gradually with a monitoring and reporting phase starting in 2025 and the system shall be fully operational in 2027. Fuel suppliers, rather than consumers, will be responsible to report their emissions and surrender allowances. The new system envisions lower emission reduction targets of 43% by 2030 from 2005 levels, compared to 62% under EU ETS1. The system will cover main fuels like natural gas, gasoline, diesel, heating oil, Liquefied Petroleum Gas (LPG), and coal, which sometimes is used in some industrial settings. In an earlier note [1] we covered the main aspects of EU-ETS2 such as the phase in process, associated mechanisms, and potential dynamics. This note aims to highlight the channels by which ETS2 affects regulated entities, along with monetizing the expected impacts on households energy bills in the Netherlands.
