Carbon Market News Roundup

January 23, 2026 | Volume III, Issue 2| The FACS Team

Welcome to the January edition of the Carbon Market News Roundup, our monthly briefing on the evolving landscape of global carbon markets and climate-related regulation. Our previous issues, along with the rest of our commentaries, may be read here.

In this issue, we examine how Europe’s carbon markets are repricing as regulatory implementation accelerates and compliance obligations expand across sectors. EU ETS prices climbed to their highest levels since August 2023 as markets responded to tightening supply, reduced auction volumes, and the definitive launch of CBAM’s financial phase in January 2026 while maritime decarbonization enters a more exposed phase as shipping moves to 100% ETS coverage for verified CO₂ emissions in 2026. At the same time, CBAM implementation has begun at scale, with early import data showing Europe’s exposure to carbon-intensive supply chains even as late guidance, default values, and political signals around potential exemptions highlight ongoing operational and geopolitical uncertainty. In the meantime, voluntary carbon markets continue to rebalance, with total market value surpassing $1 billion in 2025 despite lower retirements, as buyers increasingly prioritize higher-integrity credits and integrate voluntary markets more strategically into long-term decarbonization pathways.

EU ETS – Regulations Updates

EU Carbon Prices Hit Highest Since August 2023: What Causes The Surge?

Jennifer L., Carbon Credits

Brussels and London to start ETS-link talks next week – https://eutoday.net

EU Today

EU ETS reform: impending cost shocks for EU producers

Freya Gompertz, Felix Gallagher, and Josh Cowley, Fastmarkets

Make impact assessments great again (MIAGA)

Wijnand Stoefs, Carbon Market Watch

EU carbon prices climbed above €92 per ton in late January, reaching their highest level since August 2023, as expectations of tighter supply and stronger policy enforcement reinforce bullish market sentiment. The rise reflects reduced auction volumes, the tightening emissions cap, and growing compliance demand as companies prepare for future surrender obligations. The activation of the Carbon Border Adjustment Mechanism (CBAM) in January 2026 has further strengthened expectations that free allocations will decline more rapidly, increasing scarcity in the EU Allowance market. Together with seasonal factors and increased fund participation, these dynamics signal that markets increasingly price in structurally higher carbon costs over the medium term, consistent with the EU’s longer-term decarbonization targets.

Source: Trading Economics

At the same time, regulatory change is reshaping cost exposure and governance expectations under the EU ETS. Brussels and London are preparing to open formal negotiations on linking their emissions trading systems, driven largely by the financial and administrative burden CBAM would otherwise impose on UK exporters. While linkage could eventually harmonize carbon pricing and deliver mutual CBAM exemptions, the process is expected to be lengthy, leaving near-term uncertainty for affected industries. In parallel, reforms to the EU ETS itself, like the gradual phase-out of free allocations, are projected to generate substantial cost shocks for EU industrial producers over the coming decade, with rising effective carbon prices increasingly passed through to downstream sectors. Against this backdrop, growing criticism of the European Commission’s policymaking process highlights concerns that key climate and carbon-market decisions are being advanced without robust impact assessments or transparent consultation, potentially undermining predictability and confidence at a moment when regulatory clarity is becoming ever more critical for investment and competitiveness.

Maritime & Shipping Updates

Simplifying regulatory compliance

Hellenic Shipping News Worldwide

Significant increases in ocean carrier emissions surcharges for 2026

Metro

Interferry Seeks Immediate Halt to 100% EU ETS Coverage for Shipping

Ship and Bunker

Hydrogen’s potential and its limits for decarbonization highlighted in LR’s latest Fuel for thought report

Cyprus Shipping News

Shipping’s EU ETS exposure is stepping up materially in 2026, with the phase-in ending and operators moving to surrender allowances for 100% of verified CO₂ emissions, up from 70% in 2025 which is a shift that raises both compliance complexity and direct financial risk. Meanwhile, carriers are translating this higher EUA liability into commercial terms. ETS-linked surcharges are rising again from January 1, 2026, with many lines announcing 40–50%+ increases on key trade lanes as charges are recalibrated and, in some cases, consolidated with FuelEU Maritime-related costs. These dynamics point to ETS costs becoming a more visible and contested component of landed cost, where the main near-term differentiator for shippers is less the existence of the charge than the variability in how it is calculated and passed through across carriers and routes.

As the cost burden rises, industry voices are also sharpening their critique of policy design and competitive effects. Interferry has called for freezing maritime ETS coverage at the 2025 level (70%) rather than moving to 100%, arguing that uneven cross-modal treatment, particularly with road transport outside equivalent carbon pricing, could divert cargo and passengers back to roads and raise emissions, while also stressing uncertainty over how ETS revenues will be used to support maritime decarbonization. Meanwhile, decarbonization pathways remain constrained by fuel realities: Lloyd’s Register’s latest “Fuel for thought” assessment frames green hydrogen as a potential zero tank-to-wake option (and a building block for e-fuels), but emphasizes limits tied to storage, safety, infrastructure, and cost, suggesting near-term viability primarily in short-sea segments like ferries and coastal vessels, rather than as a scalable solution for most deep-sea shipping in the immediate horizon.

EU CBAM Updates

EU CBAM hits the ground running then trips over fertilizer exemption

Eklavya Gupte, S&P Global

Europe’s CBAM goes live as importers grapple with rising carbon costs

Eklavya Gupte, S&P Global

Importers were unable to adequately prepare for CBAM

Halina Yermolenko, Eurometal

Why developing countries oppose the EU’s carbon border tax

Eco Business

The EU’s Carbon Border Adjustment Mechanism entered its definitive phase in January 2026 with a strong initial uptake, as more than 10,000 import declarations were filed in its first operational week and iron and steel overwhelmingly dominated early flows. This early data shows both the sector’s carbon intensity and Europe’s dependence on imported steel. However, momentum was quickly disrupted by policy uncertainty after the European Commission signaled it might temporarily exempt fertilizers if CBAM were found to fuel food-price inflation. That announcement triggered an immediate freeze in fertilizer trade and highlighted how sensitive CBAM implementation remains to last-minute political interventions. At the same time, the broader launch of CBAM confirmed a structural shift in global trade by which importers of aluminum, cement, electricity, fertilizers, iron and steel, and hydrogen are now financially exposed to EU carbon prices, reinforcing CBAM’s role as a central extension of the EU ETS rather than a standalone trade instrument.

Operational and geopolitical frictions are becoming more visible as companies adjust to the new regime. Importers across Europe report that they were insufficiently prepared for CBAM, largely because key technical documentation, benchmarks, and calculation coefficients were released only days before the mechanism took effect, slowing contract signings and increasing reliance on conservative default values. This has already translated into higher effective carbon costs and price premiums on imports. Beyond Europe, CBAM has drawn sharp criticism from developing economies, which argue that the policy risks shifting the cost of decarbonization onto poorer exporters and undermining trade fairness. Countries including China, India, and others have raised concerns at the WTO and warned of retaliation, while the EU maintains that CBAM is WTO-compliant and non-discriminatory.