The first weeks of the Trump presidency in the United States have brought a blizzard of executive orders targeting America’s trading partners, which has extended to the energy sector. In keeping with its close correlation to natural gas, European carbon reacted to the initial news around the tariffs but was then quickly propped up by changing sentiment around the natural gas space.

Last weekend, the White House announced tariffs of 10% on goods imported from China, which prompted a retaliatory measure from Beijing that imposed 15% tariffs on US coal and liquefied natural gas and 10% on crude oil.

The 15% levy on shipments of LNG from the US effectively raises the import cost of liquefied gas, making US shipments less competitive and will encourage Chinese buyers to source gas from elsewhere. However, the tariff on gas is seen as somewhat symbolic: China imported just 4.5% of its LNG from the United States last year, with the bulk of its purchases coming from Australia and Qatar.

Nevertheless, European gas reacted sharply to the news, dropping 3.3% on Tuesday as traders concluded that lower Chinese imports might mean more US LNG coming to Europe. At the same time, EU carbon weakened 3.5% on Monday as equity markets across Europe dropped at the prospect of tariffs spreading to the EU.

Since the initial reaction, however, prices have resumed their upward momentum as more immediate demand-based headlines assumed greater importance. Reports that Ukraine has raised imports of gas to cover domestic demand has boosted front-month TTF natural gas, the benchmark for European gas, to its highest yet, and this has brought along European carbon prices, which are benefiting from their long-term correlation to gas markets.

The latest Commitment of Traders data showed increases in investment funds’ net length for both gas and carbon, further underpinning the upward momentum that has been in place since the middle of December.

Across the Channel, the UK ETS price underwent a dramatic upward jump early last week after the Financial Times reported that the UK has asked to add the issue of linking markets to the agenda of a spring summit meeting.

The sudden jump in prices was attributed to optimism that linking negotiations would bring UKA prices into line with the prevailing EUA market. UKAs had dropped to less than 50% of the EUA price at the start of the month.

The December 2025 UKA contract spiked 13% on January 28, and has followed this with a further 17% to reach a seven-month high of £47.00 on January 31. Since then the market has managed to hold on to its gains, with trade taking place above £43.00, and investment funds adding moderately to their net long position.

Carbon Market Roundup

The weighted global price of carbon is $55.42, down 1.2% for the week. EUAs are down 0.9% from the week prior, at €81.93. UKAs are up 3.6% at £45.82. CCAs are down 2.4% at $30.18. RGGI and WCI prices remained relatively flat for the week, up 0.4% at $22.10 and up 0.2% at $54.15, respectively.