Against the backdrop of low European gas storage levels, the latest forecasts pointing to only a brief cold snap this weekend, rather than a prolonged cold wave, have provided some relief. However, forward gas and oil prices remain supported by escalating tensions in the Middle East, which in a worst-case scenario could lead to prolonged disruptions across oil and LNG markets. Despite this, power prices have fallen following a sharp sell-off in carbon markets, particularly in the UK, where limited liquidity and political uncertainty have amplified the move seen on the continent (see details below). We remain bearish on long-dated contracts, largely due to the expected rise in global LNG supply. However, short-term volatility could increase again depending on developments in the Middle East. 

Sustainability Spotlight: UK Government launches Local Power Plan with £1bn pledged for community renewable energy.

Promised Local Power Plan from DESNZ and Great British Energy has now been published and pledges £1bn in funding for community-owned renewable energy projects across the country. The plan aims to support 1,000 local projects and is viewed as the largest public investment in community energy in the UK’s history.

Community renewables are far less common in the UK than in many other European countries, therefore DESNZ aims to boost capacity and address barriers around finance and regulation.