18th November 2025
- Prices strengthen on first signs of winter
- EU agrees to discuss carbon market linking with UK
- Fossil fuel emissions continue to rise
- Global compliant markets play major role in reducing emissions
Prices strengthen on first signs of winter
UKAs continued to strengthen, closing last week at £57, an increase of £1.65 on the previous week’s close, together with hitting a 2025 high of £58.65 on the 11th November. Whilst on the 13th November the EUA hit €82.79 the highest level since January pushing the average EUA price for 2025 over £60, while the average UKA price now stands at £44.52 for 2025. Recent price rises are due to several factors including the colder weather forecast across Northern Europe this week and lower gas storage levels down to 74.6% from 96.5% this time in 2024. The UK authority will hold only two more auctions of 4,475m UKA during 2025 and EUA auctions for 2025 will end on the 15th December. The start of this week has seen both UKA and EUA prices fall as the European Commission consider relaxing intensity benchmarks for industry, which could increase free allocation between 2026 and 2030 leading to lower prices.
EU agrees to discuss carbon market linking with UK
Last week the European Union countries agreed to start talks with the UK to link the two sides of the carbon markets, a spokesperson for Denmark’s EU presidency said, in a move which is part of resetting relations following Britain’s exit from the EU. At the end of last week, the EUA market price was £14 higher than the equivalent UKA. By linking their carbon markets, the two sides would exempt one another from their respective carbon border tariffs. However, the linkage is unlikely to happen in time for British firms to avoid the EU’s carbon border levy, which from January 1 will initially impose fees on the following high CO2 emitting sectors: steel, cement, electricity, aluminium and fertilisers.
Fossil fuel emissions continue to rise
Emissions from fossil fuels and cement are forecast to increase by 1.1% to 38.1 bn tonnes of CO2 during 2025, indicting the cutting of emissions, which continue to be discussed this week in Brazil, are moving too slowly. However, the increase is slowing due to the rapid growth of solar power, and the extraordinary growth of renewable’s in China. The power sector remains the single biggest emitter and is expected to play an increasing role in the energy sector as electric cars, heat pumps and other technologies grow. However, the expansion of renewable’s is keeping fossil fuel generation balanced even though global economies are growing.
Global compliant markets play major role in reducing emissions
Carbon pricing plays a significant part in solving global warming the International Energy Agency (IEA) told a meeting at COP30 last week. The share of GHG emissions covered by carbon pricing in 2024 is close to 30%, an increase of 6% from 2023. However, the average price in 2024 was low at $32 per tonne which was heavily influenced by the EU ETS as the largest scheme with prices over $80 per tonne. The World Bank noted that carbon markets are no longer a niche policy tool with over 80 carbon pricing instruments now in operation globally. China’s expansion of its carbon pricing scheme now covers around 8 bn tonnes of CO2. Total finance raised during 2024 was lower than previous years due to weaker prices in the UK and EU.
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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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