Investment Commentary November 2025

In November EUA prices broke above the €80 level as speculative positioning continued to grow and the first onset of colder winter temperatures boosted the market. Investment funds amassed a record 101mt of net long positions, reflecting the expectation of futures price rises as the market balance moves into deficit in 2026 and the annual pause in the auction schedule across the holiday period. The lack of primary supply has proved bullish for prices in previous years, although warmer weather forecasts and a subsequent fall in gas and power prices prevented the market from challenging the year’s previous high of €84.17.

EUAs closed the month at €83.26, up 5.67% month-on-month. On the regulatory front, the EU council voted to delay the start of the carbon market for building and transport, named ETS2, until 2028. The new scheme will cover 1.2 billion tons of emissions to further underpin the EU’s 2040 targets.

The UK carbon market struggled to match the gains of its EU neighbour, as the lack of further announcements regarding market linking failed to provide any additional impetus to price levels. Furthermore, benign weather conditions and increased wind production weighed on UK power prices, helping to maintain the discount to EUAs above €16. A low auction clearing price approximately £1 below the prevailing
market level, maybe indicating a cooling of demand, also depressed prices in the last week of the month. Despite this, investment funds continued to hold over 20mt of net length throughout November. The front Dec-25 contract closed at £58.28, up 3.45% from October.

In the US, November started on a solid footing as confirmation of the program extension continued to support CCA prices above $30. However, focus shifted to the quarterly auction held on November 19th, with pre-positioning capping any further price advancements. The results showed 51.3mt sold, clearing $1.50 below the prevailing futures market price with a low bid-to-cover ratio of 1.10. Market participants
viewed the outturn as weak, reflecting uncertainty around the timing of CARB’s publication of the Initial Statement of Reasons (ISOR) which has been continually delayed for 18 months. Ahead of the Thanksgiving holiday, CCAs settled at $29.18, down 9.46% from the previous month’s close.

Increased seasonal energy demand as winter arrived on the US east coast propelled RGGI prices to record levels above $28 in November. The political environment also provided a supportive backdrop, as elections in several RGGI-member states resulted in wins for climate-friendly gubernational candidates, boosting confidence in the long-term. The front Dec-25 contract closed the month at $28.67, up 11.58% month-on-month.

The Greenedge Carbon Allowances Absolute Return AMC recorded a 4.56 % performance for November. Advances in both EUA and UKA prices continue to underline both markets’ strong fundamental outlook, although the UK has lagged its European counterpart. In the US, despite clearing an initial regulatory hurdle with the program extension, the CCA market continues to be challenged by uncertaintyas reflected in the quarterly auction results. RGGI prices have shown seasonal strength but are prone to pullbacks if weather patterns change. Overall, opportunities continue to present themselves as the markets moves towards the festive period, particularly as liquidity drops and volatility has the potential to increase.