13th January 2026
- Auction return drives bullish market
- Performance of the UK ETS
- Ruling on US tariffs imminent
- Wealthiest 0.1% exhaust annual carbon budget in three days
Auction return drives bullish market
During the first week of 2026 the UK carbon market remained sluggish with only a 0.5% price increase to £69.02. However, the return of auctions in the EU pushed UKA prices up to £70.49 before settling on Monday 12th January at £70.03. Monday’s EUA spot auction of 2,712,500 EUA cleared at €87.87, which was €0.16 over the prevailing spot price, pushing EUA prices to a 28-month high of €90.42. Colder weather forecasts together with gas prices rising from a five-month decline may continue to support carbon prices. At current price levels, the EU will raise its target of €20bn for REPowerEU by selling only a further 57.4m EUA allowances. Price levels potentially pushing to €100 brings political pressure from large industry struggling to compete in a global market.
Performance of the UK ETS
The UK ETS, launched in 2021 to replace the EU ETS following Brexit, has seen continued emissions reductions. In 2021, emissions reported under the UK ETS totalled approximately 108 million tCO₂e. By 2024, this had fallen to around 86 million tCO₂e, a significant decline over the initial three years. On the surface, this suggests that UK ETS Phase 1 is achieving its intended purpose of reducing carbon emissions across key industrial and energy sectors. However, a closer look reveals a more complex picture as changes at individual sites can have a large impact on national totals. For example, emissions from Port Talbot steelworks dropped from over 6.6 million tCO₂e in 2021 to 3.4 million tCO₂e in 2024, not because of major decarbonisation, but due to the site’s gradual shutdown. Several studies attribute a portion of the overall emissions reduction to the transition away from coal and other carbon-intensive fuels toward natural gas and renewable energy sources. This progress may have been driven by the UK ETS Phase 1 or by renewable subsidies.
Ruling on US tariffs imminent
The US Supreme Court is due to give a decision on some tariffs and trade strategies, and the outcome would have a significant impact on the global economy with a ruling against the tariffs potentially generating a bullish signal for emissions. Recently, several judges cast doubts on the legality of the tariffs, but the White House said that it could deploy alternative measures in case of an adverse decision from the Court. Last week, Trump issued an order to withdraw from a total of 66 international organizations covering climate change matters. This move will likely result in less budget allocated to renewable energy and sustainable development, as the withdrawal included the Green Climate Fund.
Wealthiest 0.1% exhaust annual carbon budget in three days
Research by Oxfam has found that the world’s richest 1% used up their share of carbon emissions just 10 days into 2026, while the richest 0.1% took just three days to exhaust their annual carbon budget. Lower and middle-income countries are most at risk from the detrimental effects of these emissions, with global economic damage potentially adding up to £44tn by 2050. Oxfam has called on Britain’s chancellor to increase taxes on climate-polluting extreme wealth, and corporations that hold disproportionate power and influence.
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Disclaimer:
This newsletter is intended solely for the information of professional clients, including large corporates and public sector bodies such as universities and hospitals, and eligible counterparties. It does not constitute advice nor should it be relied upon in making decisions regarding the UK Emissions Trading Scheme (UK ETS). All content within this communication is provided for informational purposes only and has been prepared in accordance with the principle of fair, clear and not misleading information as required by COBS 4.2. Readers should seek their own professional advice when planning to undertake transactions in the UK ETS. No representation or warranty is given as to the accuracy or completeness of the information provided. The publisher accepts no liability for any loss arising from the use of or reliance on the information contained in this newsletter.
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