Market Report March 2025

The ongoing trade tensions have further darkened the economic outlook this month, with the EU and Canada’s responses to increased tariffs on steel and aluminium prompting promises of countermeasures from the US. This escalation, which is likely to impact both consumer purchasing power and company margins, has seen gas and power markets rise week-on-week, supported by stalled negotiations between Russia and Ukraine and unfavourable weather conditions.

Although a resumption of gas flows via Ukraine seems unlikely for now, the warm and sunny conditions that pressured prices lower at the start of March have quickly given way to cold, cloudy, and calm weather across Northwestern Europe, driving short-term prices higher. However, the weather is expected to exert downward pressure on prices over the next few weeks, due to a return to seasonal wind generation levels, strong solar output, and temperatures climbing to around two degrees above average.

The UK government has announced plans for a new Climate Change Agreements scheme, with applications opening in May 2025, which should allow qualifying members within the laundry industry to take advantage of welcome Climate Change Levy (CCL) discounts via member schemes operated by the likes of the TSA (Textile Services Association). This initiative aims to continue to support businesses in reducing emissions while maintaining competitiveness, offering a crucial opportunity for companies to enhance their sustainability practices and contribute to national climate goals. UK carbon prices are surging again following remarks by Spencer Livermore, the Financial Secretary to the Treasury, who indicated that the government is considering linking the UK’s Emissions Trading Scheme (ETS) with the EU’s system which could see large increases in pass through costs to those not on a fully or part fixed energy contract.

European gas storage withdrawals slowed significantly last month, aided by mild, windy, and sunny conditions with storage facilities currently 36.2% full, down only 3.7% over the past few weeks, easing concerns about end-of-winter levels. This will hopefully lead to more stable and lower gas prices during the traditionally cheaper summer period, as there will be less urgency to restock EU storage levels in readiness for next Winter.

In other news

American fusion research to cut emissions – Fusion energy breakthrough could deliver sustainable, emissions-free power for future generations. The US Department of Energy is funding a university project looking into commercialising fusion. The University of Kentucky (UK) has secured $2.3 million (£1.78m) in funding to develop advanced materials for commercial fusion energy. The project, part of the CHADWICK initiative, aims to create first-wall materials capable of withstanding extreme temperatures and radiation inside a fusion reactor. If successful, this research could bring commercial fusion closer, helping cut emissions and drive the transition to sustainable energy.

Europe’s bold new carbon tax: saving the planet or squeezing consumers – EU’s new carbon market could send heating and transport costs soaring. The EU’s latest climate rules are about to hit consumers where it hurts: their wallets. The new Emissions Trading System II (ETS II), set to launch in 2027, will slap a price on carbon emissions from road transport, buildings and small industries. The idea is simple: make pollution expensive enough and emissions will drop. But that comes at a cost. While fuel suppliers will foot the bill initially, those costs will trickle down to consumers.

Pay them for the pylons says minister – Ahead of major planning bill Labour says people should get £250 for living near new infrastructure. Housing Minister Alex Norris told Sky News: “We’re clear that communities need to share the benefits. And if you are making that sacrifice of having some of the infrastructure in your community, you should get some of the money back. “So we’re making that commitment, £250 a year if you are near those pylons. So we think that’s a fair balance between people who are making that commitment to the country themselves, well they should be rewarded for that.”