October Pricing Analysis - Global Compliance Carbon

Summary

Global compliance carbon edged higher in October, with the median product up 0.58% and only W4 stalling. Europe led: gas surged to four-year highs, lifting EUAs to €89.08/mt, while EU-UK linking reports pulled UKAs toward EU prices. RGGI dipped, held near $40, then rallied to a monthly high of $42.13, and rising carbon costs are now reaching power bills. Asia-Pacific and the California allowances moved in small steps. The 20 November EU-UK summit and gas storage are the next catalysts.

Price action

• UKA led the month, up 6.61% MoM vs. EUA’s 1.41%; both closed near their monthly highs, having bottomed on 5 Oct (EUA €83.55/MT, UKA £59.85/MT).
• EUA climbed from €85.29 to €89.08/mt (+4.44%, +10.26% YoY), peaking at €89.09 on 29 Oct, its highest since 16 January, as TTF hit four-year highs. UKA rose from £61.81 to £65.42/MT (+5.84%, +15.12% YoY), peaking at £66.09 on 12 Oct, its highest since 22 January, with its biggest gain (+£2.49) following linkage reports on 7 Oct.
• Volatility widened for both (EUA’s range grew to €5.54/MT, UKA’s to £6.24/MT vs. September); both saw their sharpest daily drop on 15 Oct, but a Week 5 rebound erased the Week 4 dip and kept October’s uptrend intact.
• RGGI fell from $42.00 to $38.78 by Oct 5 as allowances pulled back below $40 after an end-of-September rise, held near $40 through W3-W4, then rose 3.8% in W5 to close at its monthly high of $42.13.
• WCA opened at two-year lows below $39 before briefly touching $40.00 on Oct 22-23 and settling back near $39.00; CCA held steady between $32.25-$33.00; California Carbon Offsets were unchanged (3-Year $18.75, 8-Year $18.50, Guaranteed $19.12); California LCFS climbed from $89.13 to $92.88, led by a strong +2.0% W3; and Oregon LCFS swung the most, dropping 5.2% in W2 to $78.50 before rallying three straight weeks to $86.00.
• KAU rose through W2-W4 before flattening in W5 ($21.79 to $22.63), ACCU and LGC each climbed steadily all month (~1.2% apiece), CEA Avg gained 3.0% in W3 before easing in W4-W5, and J-Credit and NZU stayed range-bound, within $0.28 and $0.62 respectively.

Cross-market dynamics

Gas rallied 43% to four-year highs; carbon followed the direction but captured a fraction of the move.

• TTF day-ahead rose from €73.56/MWh (1 Oct) to €105.13/MWh (30 Oct), +42.91%, averaging €87.30/MWh (+15.24% MoM); NBP rose 46.38% to €103.56/MWh
• The driver was storage: EU stocks were 74.26% full on 20 Oct vs 82.84% a year earlier (GIE), with LNG supply constrained by the Middle East conflict
• Gas priced above coal-switch levels lifts coal burn and power-sector emissions, adding allowance demand
• Transmission was partial: EUA rose 4.44% and UKA 5.84% open-to-close, against 43–46% for gas
  • EUA's strongest week (W5, +3.48%) coincided with TTF crossing €100/MWh intraday on 28 Oct.

Cross-regional dynamics

The EUA-UKA spread compressed by $5.81/mt MoM as linkage reports pulled UKAs toward EU levels.

• The EUA-UKA spot spread averaged $12.19/mt vs $18.00/mt in September; it opened at $14.56/mt, hit a low of $10.92/mt (23 Oct) and closed at $11.86/mt
• The compression began before October: the spread fell from $19.96/mt (28 Sep) to $15.76/mt (29 Sep) after the UK prime minister signalled closer EU ties
• It then fell a further $3.12/mt on 7 Oct on reports of a linking agreement
• The EUA/UKA ratio fell from 1.18 to 1.14, with a low of 1.12 on 12 Oct
• Linkage would make the two allowances interchangeable for compliance and underpin reciprocal CBAM exemptions; pricing converges toward the larger, higher-priced EU market, so the move concentrates in UKAs
• The spread has held a $10.92–12.21/mt band since 12 Oct, showing the agreement was largely priced ahead of the 20 November summit.

Data & positioning

The EUA curve shifted in parallel, while UKA deferred vintages outperformed as linkage was priced into later years.

December vintage spreads (contango; deferred minus Dec-26)

• EUA Dec-26 rose €3.55/mt (+4.15%) to €89.19/mt and Dec-31 rose €4.11/mt (+3.92%) to €109.04/mt with carry unchanged, a parallel repricing pointing to gas-driven demand rather than a shift in long-term supply expectations, while UKA Dec-28 rose £3.86/mt (+5.57%) against Dec-26’s £3.15/mt (+5.07%), with deferred vintages carrying more of the convergence premium given linkage’s later effect; separately, EU co-legislators raised the MSR invalidation threshold to 700m allowances (from 400m, effective 2031) on 20 Oct while keeping cancellation in place, rejecting the Commission’s proposed indefinite pause and widening EUA Dec-31 carry only €0.56/mt.

Something to watch

• EU-UK summit, 20 November: the EUA-UKA spread sat at $11.86/mt on 30 Oct, holding a $10.92-12.21/mt band since 12 Oct, suggesting a confirmed deal and timetable is largely priced in, with delay or a weaker outcome reopening the spread and UKA carrying the downside; watch the summit outcome, ratification timetable, and the spread/ratio (1.14).
• TTF sat at €105.13/MWh on 30 Oct, with EU storage below year-earlier levels and Germany missing its winter storage target. Gas holding above coal-switch levels sustains power-sector allowance demand (and a cold snap would add to it), while a retracement would remove that support; watch TTF day-ahead, GIE storage withdrawals, and temperature forecasts.
• Brussels is discussing changes to Article 29a that would shorten the price-spike assessment window from six months to two and release 25m allowances, while Parliament separately voted on 22 Oct for more free allocation to “fallback” industries. A faster trigger would add supply into a gas-led rally and cap EUA upside; watch ETS review negotiations, formal adoption of the MSR deal, and EUA levels against the trigger’s reference average.
• Carbon costs are reaching power bills, and regulators are responding. Dominion offered Virginia regulators two ways to recover its allowance costs on Oct 28; the unmitigated option adds about $13 a month to the average residential bill, with a state credit expected to offset it and the rider not starting until March 2027. New Jersey held a joint hearing on Oct 15 on RGGI allowance prices and a ratepayer relief plan. Bill credits funded by RGGI proceeds don’t change allowance supply, so the thing to watch is whether relief stays in credits or moves toward changing supply.

Note: All figures, prices and market activity referenced in this report are based on the period 1 to 30 October 2026.