Carbon - In focus: US-Iran war heightens EU ETS split

: Emissions
26/03/13

The debate around the role of the EU emissions trading system (ETS) has intensified this month, as focus shifts towards concerns that the carbon price is increasing already high energy prices triggered by the onset of the US-Iran war.

EU ETS prices have been treading a fine line in recent sessions, as support from a sharp increase in natural gas prices — which has encouraged a switch to more carbon-intensive coal-fired generation, thereby boosting compliance demand for allowances — is counterbalanced by broader macroeconomic risk-off sentiment, which has prompted some speculative participants to close out long positions in the market.

This led to the benchmark front-year EU ETS contract initially holding relatively stable following the first strike on Iran on 27 February, closing within a range of €70-75/t of CO2 equivalent (CO2e) in Argus assessments until 11 March.

But the rally in the European wider energy complex following the start of the conflict has reignited calls from politicians for measures to ease carbon prices, already seen last month in the context of preserving industrial competitiveness.

Italy has been particularly vocal, with prime minister Giorgia Meloni urging an immediate suspension of the EU ETS for fossil fuel producers, to help curb high energy prices until global fossil fuel prices return to pre-war levels.

The EU ETS front-year contract came under firmer downward pressure on 12 March, falling to its lowest close in 10 months after unconfirmed reports that the European Commission is considering changes to the system that could loosen the market's supply-demand balance.

Support remains

But the commission has generally maintained a firm stance on the ETS. Commission executive vice-president Teresa Ribera warned that its suspension would not send any positive signals, and would ultimately harm the bloc's competitiveness.

And a number of EU member states, along with some industry and non-governmental organisations (NGOs), have reiterated their support for the scheme in the face of criticism.

Dismantling the ETS would be the "wrong answer" to rising energy prices, and a rushed reform risks distorting price signals without improving competitiveness, said Spain in an informal letter to EU institutions. The country later joined Portugal, the Netherlands, Luxembourg, Slovenia, Denmark, Finland and Sweden in a non-paper that termed the ETS the "cornerstone" of the EU's climate policy, and an essential tool to strengthen EU industry.

"Making fundamental changes to the ETS, calling into question the ETS instrument itself, or suspending it, would constitute a very worrying step backwards," the non-paper said.

Several joint letters, cumulatively signed by around 200 companies, investors and organisations — including Eurelectric, WWF, IKEA and Volvo — argued that the ETS is not the source of Europe's competitiveness challenges.

Industrial installations received extensive free allowances between 2008-24, which at times exceeded their verified emissions, another joint letter from 35 NGOs highlighted, and claims that carbon pricing is destroying industry overlook deeper structural dynamics in the EU.

A 50pc fall in emissions covered by the ETS since 2005 alongside a 17pc rise in economic output is evidence that the system works, a separate joint statement by a group of 17 energy and trading firms and associations said. And while concerns about volatile energy prices owing to global geopolitical uncertainties are "legitimate", EU leaders must avoid repeating the "ad hoc" market interventions made during the energy crisis sparked by the Russia-Ukraine conflict, they added.

Pressure mounts

The latest discussions on the ETS have emerged ahead of a meeting of EU ministers on 19-20 March, in which the recent rise in energy prices is likely to feature, and with one eye still on the scheduled ETS revision in July.

The commission will likely have to respond to pressure on the ETS in light of the Iran conflict, an EU official said this week, describing the timing for holding ETS review discussions as just about the worst moment possible.

But conditions have not yet been met to declare an emergency allowing for fast-track crisis legislation as for energy markets in 2022, he said.

Russia's full-scale invasion of Ukraine drove intense volatility in EU ETS prices amid similar concerns surrounding fossil fuel supply to the EU. The front-year contract dropped to €87.21/t CO2e on 24 February 2022 — when Russian troops first entered Ukraine — from €94.74/t CO2e the session before, eventually tumbling to €58.31/t CO2e on 7 March 2022 before rebounding to €81.43/t CO2e towards the end of that month.

The EU is not experiencing an energy crisis as severe as the one seen in 2022, EU commissioners said this week, pushing back against proposals to intervene in the market or adjust price settings.

"We don't have a security of supply problem as of yet in Europe. But others in the world are in a different situation," EU energy commissioner Dan Jorgensen said, noting that gas is not as consequential in the bloc's energy price setting today as it was in 2022.

By Kiara Campagne Nieva

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26/03/13

US oil sector warns against export restrictions

Washington, 13 March (Argus) — A spike in gasoline and diesel prices triggered by the US-Israel war with Iran has prompted oil industry officials to preemptively argue against potential calls for the reinstatement of crude export restrictions the US lifted more than a decade ago. Oil industry officials see no indications that President Donald Trump or other policymakers are considering a ban on exports, which they say would cause chaos in global markets and cut off energy supplies to allies when they need it most. In 2015, the industry successfully lobbied the US Congress to lift export limits that had been in place for decades, opening up a US crude export market that averaged 4mn b/d last year. "We don't believe the idea of banning domestic exports is being considered seriously, nor should it be," an oil industry official said. "The US doesn't have a supply problem, and halting exports only hurts our economy." But the recent surge in fuel prices — retail diesel prices rose by nearly $1/USG in the week ending on 9 March, and regular grade gasoline increased by nearly 50¢/USG — has put the industry on the defensive. Banning exports would likely result in an oversupply of light sweet crude in shale producing areas such as the US Gulf coast, where most of the region's refineries are optimized to process sour crude, according to industry leaders. "Pulling American oil off the world market would further tighten global supply and could trigger cascading economic consequences for consumers," American Petroleum Institute chief executive Mike Sommers said in a series of posts on X that attacked "bad policy ideas" of restricting exports. US energy secretary Chris Wright said during an interview on CNN on Thursday there was "no discussion" in the administration on banning oil exports. Trump, who has spent his second term focused on achieving "energy dominance", the same day said the ramp-up in oil prices would result in a financial benefit to the US. "The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money," Trump wrote on his social media platform. But the administration's approach on a separate energy policy lever has already shifted. As recently as last week, administration officials said they were not considering the release of crude from the US Strategic Petroleum Reserve (SPR). That stance changed as sustained Iranian attacks on ships near the strait of Hormuz drove up oil prices. Trump on Wednesday ordered the release of 172mn bl of crude from the SPR, the second-largest release since the reserve was created. Reimposing a ban on crude exports could create a "short-run bonanza" for US refineries that specialize in processing light sweet crude, which they could buy at a discount, economists at the US Federal Reserve Bank said in a research report in 2022. But those dynamics would not last because lower prices would lead shale producers to cut output, according to the report, and domestic fuel prices would be unchanged as long as refiners could export refined products. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

EU leaders eye measures to cut high power, ETS prices

26/03/12

EU leaders eye measures to cut high power, ETS prices

Brussels, 12 March (Argus) — EU leaders are discussing a call for the European Commission to "urgently" present concrete proposals to lower electricity prices in the short term, as well as using the review of the bloc's emissions trading system (ETS) to reduce carbon price volatility. Draft conclusions prepared for a meeting of EU leaders in Brussels on 19-20 March, seen by Argus , call on the commission to examine "all components" of wholesale and retail electricity prices. The draft conclusions — which may still change before the summit — also specify that the ETS review scheduled for July should "both reduce the volatility of the carbon price and mitigate its impact on electricity prices", while preserving the ETS' "essential" role in the climate and energy transition through its market-based carbon price signal. Any changes to the ETS or the bloc's market design would have to be proposed by the commission and then approved by majorities among member states and in the European Parliament. Commission president Ursula von der Leyen said while addressing parliament on 11 March that the bloc should cut the impact of natural gas costs on power prices, listing "subsidising or capping" gas prices among the options. Von der Leyen also noted that carbon costs average around 11pc of energy bills, alongside energy itself at 56pc, grid charges at 18pc and taxes and levies at 15pc. Europe would be consuming 100bn m³ more gas without the ETS, she added. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

Congress may punt on refiner biofuel waivers: Update

26/03/11

Congress may punt on refiner biofuel waivers: Update

Adds RFA, Grassley comments to show senators also may defer waiver changes. New York, 11 March (Argus) — US lawmakers who have struggled to agree on fuel-market reforms could defer a decision on whether to limit oil refiners' ability to skirt a biofuel mandate program, according to the head of a major ethanol trade group that backs such restrictions. The US House of Representatives tasked a "rural domestic energy council" of more than 20 Republican lawmakers with drafting legislation that would allow year-round sales of gasoline with up to 15pc ethanol (E15). But the so-called E15 council has missed its deadlines for reaching agreement, in part because some refiners oppose limiting hardship waivers from annual biofuel quotas that currently are available to small refineries. There is "increased conversation" in the House and Senate around considering exemption changes later, Renewable Fuels Association chief executive Geoff Cooper told Argus in an interview. "Based on some things we're hearing, there is some talk of a new strategy to move immediately on pieces where there is consensus." That would be a major shift, as debate among lobbyists and lawmakers for months has revolved around not just exempting E15 gasoline from summertime smog rules, but also around changing the small-refinery exemption program that has frustrated farm advocates and oil majors alike. The US requires oil companies to annually blend biofuels or buy Renewable Identification Number (RIN) credits from those that do, while letting refineries that process no more than 75,000 b/d of crude request hardship waivers that can save them tens of millions of dollars. New federal mandates are expected this month. An earlier bill negotiated in part by the Renewable Fuels Association would have limited exemptions to companies with limited collective refining capacity, cutting off larger firms that currently can win waivers for smaller units they own. After midsize refiners like Delek and Par Pacific protested, the House task force has floated letting small refinery owners of various sizes seek waivers but capping the total amount of gasoline and diesel that can be exempted each year. The Renewable Fuels Association would prefer that Congress pass changes to E15 availability and biofuel mandate exemptions together, "but we really can't allow that to further hold up the E15 legislation", Cooper said. "One of the frustrations I have is dealing with these refineries and the RINs and things like that that are holding up getting E15 by legislation", US senator Chuck Grassley (R-Iowa) said Monday at a Senate agriculture committee hearing. Cooper suggested that the best "starting point" for negotiations on a "skinnier" bill is an earlier proposal that would allow year-round E15 sales and would compensate some unnamed small refinery owners for past compliance by providing them with special program credits that do not expire. A framework shared with Argus last month estimated this provision could mean regulators give those companies 363mn special RINs. That slimmer bill nearly passed Congress in 2024 but ran into headwinds last year when the American Petroleum Institute pitched the White House and biofuel advocates on a larger package that also would include limits on small refinery exemptions. The group was frustrated by generous waivers President Donald Trump's administration has given some smaller competitors and wanted to prevent regulators from making companies without exemptions blend more biofuels in future years as an offset. The offices of US representatives Randy Feenstra (R-Iowa) and Stephanie Bice (R-Oklahoma), the co-chairs of the E15 council, did not immediately respond to requests for comment. The American Petroleum Institute also did not respond when asked whether any E15 bill would need exemption changes to win its support. More details on the council's plans could come "next week", when the House returns from recess, Cooper predicted. Iran adds fuel to E15 talks The debate around E15 has shifted drastically since the US war in Iran has sent crude futures surging, leaving higher-ethanol blends as one way to temper rising pump prices. The vast majority of gasoline sold in the US contains 10pc ethanol. A group of midwestern states and the Renewable Fuels Association have asked the Trump administration to issue emergency waivers allowing E15 sales across the US this summer. The Trump administration issued emergency waivers last year allowing summertime E15 sales and halting a transition in the midcontinent to a costlier fuel blend, but only days before summer driving season. Cooper urged regulators to signal plans sooner this year — at least by the end of March — to avoid supply-chain disruptions. Critics of the biofuel mandates likewise see opportunity. The Fueling America Jobs Coalition, which includes independent refiners and unions, has lobbied the administration to set less aggressive biofuel quotas as a strategy to cut RIN costs that spill into retail fuel prices. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

US E15 panel may punt on refiner biofuel waivers

26/03/11

US E15 panel may punt on refiner biofuel waivers

New York, 11 March (Argus) — A task force of US lawmakers that has struggled to agree on fuel-market reforms could defer a decision on whether to limit oil refiners' ability to skirt a biofuel mandate program, according to the head of a major ethanol trade group that backs such restrictions. The US House of Representatives tasked a "rural domestic energy council" of more than 20 Republican lawmakers with drafting legislation that would allow year-round sales of gasoline with up to 15pc ethanol (E15). But the so-called E15 council has missed its deadlines for reaching agreement, in part because some refiners oppose limiting hardship waivers from annual biofuel quotas that currently are available to small refineries. There is "increased conversation" on Capitol Hill around considering exemption changes later, Renewable Fuels Association chief executive Geoff Cooper told Argus in an interview. "Based on some things we're hearing, there is some talk of a new strategy to move immediately on pieces where there is consensus." That would be a major shift, as debate among lobbyists and lawmakers for months has revolved around not just exempting E15 gasoline from summertime smog rules, but also around changing the small-refinery exemption program that has frustrated farm advocates and oil majors alike. The US requires oil companies to annually blend biofuels or buy Renewable Identification Number (RIN) credits from those that do, while letting refineries that process no more than 75,000 b/d of crude request hardship waivers that can save them tens of millions of dollars. New federal mandates are expected this month. An earlier bill negotiated in part by the Renewable Fuels Association would have limited exemptions to companies with limited collective refining capacity, cutting off larger firms that currently can win waivers for smaller units they own. After midsize refiners like Delek and Par Pacific protested, the House task force has floated letting small refinery owners of various sizes seek waivers but capping the total amount of gasoline and diesel that can be exempted each year. The Renewable Fuels Association would prefer that Congress pass changes to E15 availability and biofuel mandate exemptions together, "but we really can't allow that to further hold up the E15 legislation", Cooper said. Cooper suggested that the best "starting point" for negotiations on a "skinnier" bill is an earlier proposal that would allow year-round E15 sales and would compensate some unnamed small refinery owners for past compliance by providing them with special program credits that do not expire. A framework shared with Argus last month estimated this provision could mean regulators give those companies 363mn special RINs. That slimmer bill nearly passed Congress in 2024 but ran into headwinds last year when the American Petroleum Institute pitched the White House and biofuel advocates on a larger package that also would include limits on small refinery exemptions. The group was frustrated by generous waivers President Donald Trump's administration has given some smaller competitors and wanted to prevent regulators from making companies without exemptions blend more biofuels in future years as an offset. The offices of US representatives Randy Feenstra (R-Iowa) and Stephanie Bice (R-Oklahoma), the co-chairs of the E15 council, did not immediately respond to requests for comment. The American Petroleum Institute also did not respond when asked whether any E15 bill would need exemption changes to win its support. More details on the council's plans could come "next week", when the House returns from recess, Cooper predicted. Iran adds fuel to E15 talks The debate around E15 has shifted drastically since the US war in Iran has sent crude futures surging, leaving higher-ethanol blends as one way to temper rising pump prices.The vast majority of gasoline sold in the US contains 10pc ethanol. A group of midwestern states and the Renewable Fuels Association have asked the Trump administration to issue emergency waivers allowing E15 sales across the US this summer. The Trump administration issued emergency waivers last year allowing summertime E15 sales and halting a transition in the midcontinent to a costlier fuel blend, but only days before summer driving season. Cooper urged regulators to signal plans sooner this year — at least by the end of March — to avoid supply-chain disruptions. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

Hawaii on road to low-carbon fuel mandate

26/03/11

Hawaii on road to low-carbon fuel mandate

Washington, 11 March (Argus) — Hawaii lawmakers on Tuesday advanced legislation to create a low-carbon fuel standard (LCFS) for the state. The state Senate and the House of Representatives each passed proposals to require a 10pc reduction in the carbon intensity of road fuels by 2035 and a 50pc reduction by 2045, both relative to a 2019 baseline. The bills moved forward with little or no opposition. The Senate version , SB 2999, how heads to the House, while the House companion bill , HB 1986, heads over to the Senate. The legislation would require the Hawaii Department of Transportation to adopt rules for a Clean Fuel Standard (CFS) by 1 January 2028 and begin enforcement a year later. LCFS programs require yearly reductions in the carbon intensity of road fuels such as gasoline and diesel. Fuels that exceed the annual limits incur deficits that suppliers must offset with credits generated from the distribution of approved, lower-carbon alternatives, such as renewable diesel or electricity to charge vehicles. If the legislation becomes law, Hawaii would follow similar but distinct programs in California, Oregon, Washington and the soon-to-launch New Mexico credit market , as well as programs administered by the British Columbia provincial government and the Canadian federal government. The Hawaii CFS would share many of the same characteristics as the other programs, such as allowing sustainable aviation fuel producers to opt in to the program to generate compliance credits. But it would not regulate the carbon intensity of aviation fuel. The legislation also would allow regulators to link with other similar LCFS programs and to allow credit generation for displacing other non-regulated fuel uses, such as off-road, heating, cooling and temporary power generation. The main difference between the two bills is the House version would require the Department of Transportation to report to the legislature every two years on the status of the program, market activity and other issues and to provide, if needed, recommendations for changes to the law. The Senate companion does not currently include such language. LCFS legislation in Hawaii failed in the final hours of the 2025 session. House and Senate lawmakers ran out of time to resolve differences on issues such as the start date and a feasibility study on low-carbon fuel supply. By Michael Ball Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.

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